Auto Bailout Sweetens Consumer Deals

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The White House and Congress are haggling over the final details of a bailout to get GM (GM), Chrysler and Ford (F) on the road to recovery.

The proposed details of the plan would include $15 billion in emergency loans to GM and Chrysler, while Ford, who is not in as much trouble as the other Big Two, would receive no loans. The package would also include the creation of a presidentially appointed "Car Czar" to oversee the actions of the car companies, including holding the power to void transactions exceeding $100 million.

But does a bailout mean consumers should hit the lots in search for a good deal?

According to a new grassroots ad campaign being pushed by the National Automobile Dealers Association, yes it is. NADA has created a series of advertisements titled "It's the Best Time in Years to Buy Cars" that cite three points on why consumers should be buying: Credit is available, there are great deals and incentives to buy, and vehicle quality and fuel efficiency have never been better. But whether this will translate to more sales for the Big Three or their foreign competitors remains to be seen.

Available Credit

While it might be a tough time to get a home mortgage, that doesn't necessarily translate to the auto loan industry. According to a statement from the NADA, it' a great time for the consumer with a stable job and solid credit scores. The key is to ignore the scary headlines and go straight to your dealer, who knows the market and can help find financing. They should know which banks and credit unions in the local community have money to lend, and which ones don't.

Mike Lambert of Autofinancing.net agrees with NADA's statement. "With the drop in the number of people buying cars these days, the lenders and/or dealers have had to be more aggressive with closing the deal," says Lambert. "Dealers need to sell cars, and financing is an important piece of the puzzle for the majority of car buyers. They’re doing everything they can to make the deals happen."

Great Deals and Incentives

According to Consumer Reports, one of the best times in general to buy a car is at the end of the calendar year because dealers are trying to clear inventory and prepare for the slow winter months. Of course, this year is not just any year. With November sales down (Chrysler down 47%, GM down 41%) and the 2008 models needing to clear out to make room for 2009, the auto companies are extending deals to try and lure in customers.

General Motors launched its annual Red Tag event (where you pay the price on the tag, nothing more) early this year to push sales, and Ford is offering employee pricing on 2008 and 2009 models for consumers through January 5th. Additionally, Ford is offering fuel efficiency financing incentives. And it's not just the Big Three that are offering and extending deals. Lexus's (TM) "December to Remember" event launched in November and will last into January. So, there are deals out there for those who still have money to spend.

Vehicle Quality and Fuel Efficiency


While quality might be found in foreign manufacturers like Honda and BMW, the Q word hasn't exactly been synonymous with American car manufacturers. Of the 47 categories ranked on Consumer Reports (e.g. top SUV, most family friendly) only one American car ranked as Best in Class, the Chevy Avalanche for best full-sized pickup.

And while car manufacturers and consumers have been sluggish to adopt improved fuel standards in over the last decade (hello, Mr. Hummer), the pressures of climate change and rising gas prices have driven the market’s need to get those miles per gallon up. According to GM, their 2009 lineup has 18 models that get 30 mpg or more, which beats any other auto manufacturer. Chevy's 2008 Tahoe Hybrid, which gets 50% better mpg than the regular Tahoe, was selected by Green Car Journal as the "Green Car of the Year" while the Ford Escape, which gets 34 mpg also receives an air pollution score of 9.5 out of 10 from the EPA.

However, according to J.D. Power's Green Efficiency rankings, Chevy and Ford only rank 3 out of 5, while GM is only a 2 out of 5 and none of them place a car in the top 5 of most fuel-efficient cars (Toyota's Prius tops the list.) And of the top 5 hybrids ranked by U.S. News and World Reports, only one is American (GM's Saturn) while the other four are Japanese, including the top-ranked Toyota Camry Hybrid.

So, it might be a good time to buy a car with deals abounding, but the question remains whether it's the right time to buy an American made car.

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