Confidence In Auto Makers Up After Bailout

CBS Evening News: Consumers Have Renewed Faith In Car Industry As Year End Sales Expected To Show Steep Decline

(CBS)  The latest numbers on new car sales come out Monday, and they're expected to confirm a dismal December. Analysts are estimating a 39 percent decline over 2007, but not all the news is gloomy, reports CBS News correspondent Michelle Miller.

Marc Yaniero hadn't thought seriously about trading in his old car, until now. He's one of a growing number of car owners whose confidence in American auto makers has gotten a boost in recent weeks.

"I wouldn't be standing here," Yaniero says. "I wouldn't be trading-in a paid-off BMW for a Camero if I didn't feel confident in GM."

He's confident because the Treasury Department infused $17.4 billion into General Motors last week, and pledged another $5 billion to its lending arm, GMAC. Dealers hope the rescue funds will free up credit to potential car buyers, Miller reports.

Already GMAC has lowered its minimum credit score from 700 to 621, making an estimated 49 million more Americans eligible for loans. And on top of that, dealers are offering extra incentives to those who are now eligible for financing.

"The interest rate has been lowered," says Barbara Brown. "That makes a difference because I might have to do without a car otherwise."

And other incentives, like cash rebates and two-for-one deals, are luring customers back into showrooms.

"I've seen in the past 2-3 days an influx of car traffic and more people out buying," says Judy Schumacher Tilton, who owns a dealership in Northern New Jersey.

Sales at Tilton's dealership, she says, have remained steady.

Elsewhere, vehicle sales declined 37 percent in November, the worst level in more than 26 years, Miller reports. Every major auto-maker reported decreases of more than 30 percent.

But in these tough economic times, auto experts say bargain basement pricing and low interest loans might not be enough to spur big-ticket purchases.

"People don't feel like we've hit rock bottom, and they don't want to take any chances," says Rebecca Lindland, director of IHS Global Insight's automotive group.

When they do, Miller reports, they're buying more cars and fewer trucks. That's an indication that even with lower gas prices, the failing economy may have broken our addiction to gas guzzling models. For the first year since 2000, passenger cars outsold light trucks, minivans and SUVs.

[stupidrules3]

Posted by tincup356 at 06:56 AM : Jan 05, 2009

I still want Paulson to be tried for treason after the whole financial lie.

[lochlan-2009]

Is the media trying to rally the market for a quick and little burst. Hey, I''ll take it. I know our government/corporations are corrupt to the core, and GM share prices are going back up big time by 2012. 5,000 shares here, and I''m sitting on them for the 2000% return.

[quickly101]

If Americans start buying big SUV;s and big trucks again, bring on the 4 buck a gallon gas, the road hogs deserve it.

[quickly101]

I''ll have confindence in US auto companies when they pay their workers what toyota and honda pays their american workers.

[lilly1232]

kassandras1, And what are you that the only thing you can think of to add to this forum is name calling?

[craigh9]

I live in upstate New York. Due to bad weather I drove very slowly to work one day last week affording me an opportunity to closely assess the cars passing me by - in my 1/2 hour commute I was passed by nearly 80 vehicles - 2/3''s of them were from some other company than the big 3. Certainly not a scienticfic study, but speaks volumes that the big 3 DO NOT produce what america wants to drive

[lilly1232]

rharrin1 do you ever look around you? Seems funny to me when I am on the road that there are more SUV than there are cars, someone must like them and they are not all american. I find it interest that you ummm "do gooders" are so willing to let the american car companies go down the drain. Are you one of our "People" imports that have no love for this country? You sure sound like it.

[bubbabear200]

Chrysler has just came up with a great idea that GM and Ford could use. Use the bail out money to pay for the loans that our goverment are going to be giving the big 3. Then next year brag that the loans have been paid for and ask for another bail out.
Hey its only money.
Why Not? If somebody is stupid enough to pay $50,000 for a Chevy this would sell.

[craigh9]

There most certainly is NO increase in confidence since the bailout. No one in their right mind would find a reason to have increased confidence in the ability of the big 3 to survive - why would they.
The only difference is that the big 3 have finally come to realize that their current inventory WILL NOT SELL WITHOUT DRASTIC INCENTIVES. They are selling vehicles as low as 66% of the original MSRP - That is what is resulting in slightly better sales.

[zzy-izzy]

I think they did make cars that people wanted to buy the highways are full of big SUV,S it,s the gas that people do not want to pay $4.00 a gallon for is the problem