The Land Rover Writer

Tuesday, December 30, 2008

Now What?

GMAC has received $1 billion, benefiting GM, Chrysler and GMAC itself. Now what?

It's a shame the GMAC management chose to invest in mortgage securities to earn more money, because the credit arm of GM [Cerebrus owns a portion of GMAC, which helps Chrysler, too] is really needed right now. For those Americans who have a secure job with a steady income[freelancers like me do not], this is a pretty good time to buy a new car. Of course, at today's car prices - $28,000 average price - most people need some credit assistance. At a time of a credit crunch, it's proving to be very hard to get access to leases and/or loans. So a lot of buyers are disappointed and a lot dealers have excess inventory and a lot of manufacturers have cars sitting by the factory for 100 days at a time.

Congress has asked a simple question of the banks that received the first $350 billion bailout -what has your business done with the bailout money- only to discover that most can't or won't tell them. Hmm...

So my hope for GMAC is that it will be very transparent [I know it is not required, as a newly-converted bank, to actually tell Congress what you're doing with taxpayer money] and very, very eager to extend financing. There are a lot of buyers who purchased cars whose value decreased before their loans came due. So you owe more money than the car is worth - ouch! I'm no fan of contemporary cars but I do support a vibrant domestic auto industry for those who do want their new cars.

Do not use this loan to fatten up the balance sheet for a sale!

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