By manybanking.com Staff
Long-standing turmoil in the U.S. auto industry has led to big changes for two of the nation’s automakers—General Motors (Stock Quote: GM) and Chrysler (Stock Quote: DAI). At GM, some of those changes came to the boardroom.
The Obama administration forced the departure of GM Chairman and CEO Rick Wagoner at the end of March. He has been replaced by Frederick “Fritz” Henderson, GM’s president and chief operating officer. Kent Kresa, a GM board member and former chairman and CEO of Northrop Grumman Corp. became the interim chairman of the GM Board. In a statement, Mr. Kresa also forecasted more changes to the board of the directors in the future saying, “The Board intends to work to nominate a slate of directors for the next annual meeting.”
With these executive changes, the Obama Administration hopes that new ideas can lead to a turnaround for the ailing automaker. It gave GM 60 days to produce an acceptable reorganization plan in order to receive further federal bailouts. On the other hand, Chrysler, which is considered in more dire shape, was given 30 days to work out a merger with Italian automaker Fiat. If it does, the merger will receive up to $6 billion of federal support.
So, what does all of this mean for consumers?
At the moment, the jury is still out. Until the automakers satisfy the administration requirements, the future of both companies is still somewhat up in the air. The administration has continued to affirm its dedication to the survival of the domestic auto industry. President Obama insisted that he was “absolutely committed” to that purpose in a recent press conference.
The administration has continued to float the possibility of controlled bankruptcy for one or both companies in the future. New GM Chief doesn’t seem wholly opposed to the possibility. In an interview with NBC’s “Meet the Press,” Henderson said, "If necessary, we'll go into bankruptcy to get the job done.”
But bankruptcy wouldn’t mean the automaker would disappear. The administration has sent signals that it would provide financial support to the car company while it reorganized. Additionally, the administration has committed to guaranteeing both GM and Chrysler warrantees. This guarantee is meant to green light new car purchases from these companies.
So, should your run out and buy a new GM Yukon? The answer is … maybe. Fuel efficiency aside, between dealer incentives and attractive financing options, you may be able to get a good deal. GM is currently offering a special financing of 0% APR for 60 months and cash back incentives on select vehicles.
Additionally, the $7.5 billion influx of government aid to the lending arms of GM and Chrysler has started to work it way into the market and the sales slump has shown slow signs of improvement. The tightening of credit prevented many potential buyers from being approved for loans. According to Mark LaNeve, GMAC’s (GM’s financing arm) U.S. sales chief, loan approvals were “much higher” in March at 62%. So, those in the market now have a much better chance of loan approval than before.
To compare auto loan rates in your area, input your Zip Code and search auto loan rates at manybanking.com.
—For more ways to save, spend, invest and borrow, visit MainStreet.com.