Not only is graduating from college exciting for Elisabeth Flannagan, 22, but also that her parents offered to buy her a new car.
As a senior studying journalism, she spent her entire spring break in South Carolina car shopping and found a car that she liked, the Honda Civic Si, for about $22,000 at a 3.9 percent interest rate.
The nation's franchised new-car dealers sold 16.1 million units in 2007, down slightly from the previous year's 16.5 million units, according to the National Automobile Dealers Association.
For consumers who have stable jobs and exceptional credit, now is the ideal time to purchase a new car, according to the association. But increasingly limited credit availability and diminishing consumer confidence are problems in the current economy.
I think the one thing the entire industry needs is to have an economy strong enough for consumer confidence to rebound to the point where manufacturers start to sell vehicles again
said Charles Territo, spokesperson for the Alliance of Automobile Manufacturers.
Because consumers are not purchasing new cars, dealers have had to cut back on the vehicles they are ordering from manufacturers, resulting in an overall decrease in production, Territo said.
Sales projections for 2009 show that there are about 6 million fewer units sold than at the same time two years ago, he said, adding that this is putting a tremendous strain on all of the manufacturers, not just General Motors and Chrysler.
But the answer to bringing the auto industry out of this recession alive may be found in local dealerships, according to NADA.
At Larry Schey Chevrolet Inc., 750 E. State St., federal aid and incentive programs contributed to sales in January, February and March being higher than they were in the first three months of last year, owner Larry Schey said.
As part of the Automotive Industry Financing Program, the U.S. Department of the Treasury invested $5 billion in General Motor's financing company, GMAC, in late December, according to the Troubled Asset Relief Program Report.
With federal aid, GMAC was able to lower its required credit score from 700 to 620, making it easier to lend money to a broader group of people, Schey said.
Between December and February, the department loaned $13.4 billion to GM, according to the report.
Even with additional loans, Schey said that he has not seen any direct effects on the local dealership.
We're not being as negatively affected because the new car section is not all we have he said. Our service center and used car section are not doing too bad right now.
Buying a new car is actually a better deal than buying a used car in the current market, Schey said.
Because manufactures are attempting to restructure businesses, they are developing incentive programs to attract buyers to new cars, he added.
Such programs include GM's Total Confidence Plan in which the company will take over a car payment of up to $500 a month for nine months.
A new car is the second most expensive product someone will buy Schey said.
Although Flannagan knows she wants the Honda Civic Si, her parents told her to wait until the end of the summer when dealerships bring in the 2010 models and offer good deals on the 2009 models.
I was ecstatic they were even offering to buy me one
Flannagan said. It was unexpected.
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Emilie Schneider, Laura Service
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(Alicia Fidler | Picture Editor)
Federal aid for the automotive industry makes now a good time for some people to buy a new car, experts say.
