The Auto Writer

I’m a huge proponent of relying on individuals and businesses to get the job done. I do like the federal government who does an excellent job of providing military defense and I can put up with lousy snail mail service, but beyond that there isn’t much good that comes out of Washington, DC. It seems that
many of our country’s problems are caused by self serving politicians who continually heap regulations upon us – the unspoken problem with the US car industry are those regulations, CAFE included, which have done more harm than good.

On the business front, a group of 1200 credit unions located in the Midwest are banding together to provide auto loans for GM vehicles. Located in Michigan, Ohio, Indiana and Illinois, states which have the lion’s share of the rust belt auto industry, the credit unions are pledging to provide ten billion dollars in loans for GM vehicles.

Working with GM, the credit unions will offer a “supplier discount” on the purchase of a new GM vehicle in addition to another $250 discount. This means that buyers automatically will save 5% off of the sticker price and get an additional discount on top of that.

The program is scheduled to run through June 30, 2009, and if it is successful could be expanded nationwide in January. The credit unions are working with Chrysler LLC and the Ford Motor Company to provide a similar deal.

A lack of credit has played a significant role in worsening the position of automakers as banks have tightened up lending in the face of the current economic downturn. Credit Unions, while still vulnerable, are in a much better position than GM’s in-house financing arm, GMAC Financial, which has virtually ended all leasing while making it tough for GM’s customers to secure loans.

Over the years, GMAC, Ford Credit and Chrysler Financial have taken away business from banks and credit unions. Perhaps trending back to private financing is the best approach for consumers to take, a move which might help save the Big Three.

(Source: The Wall Street Journal)