(CBS/AP) General Motors Corp. said Tuesday it will offer financing as low as zero percent over the next week for several 2008 and 2009 models as the automaker makes a big year-end push to improve sales.
"General Motors could not have survived without this," said CBS News business correspondent Anthony Mason. "If the government was going to spend $13 billion to prop up GM, they had to spend the $5 billion to prop up GMAC."
Mark LaNeve, a GM vice president, said GMAC's approval to become a bank holding company and qualify for government funding were crucial steps to affording the new financing offers.
Previously, GMAC was unable to offer such low rates to consumers because its lack of funds, GM said.
"I think it would be fair to say that without this change ... we would not be able to do this today," LaNeve said in a conference call.
GM said it will offer zero-percent financing for up to 60 months on the 2008 Chevrolet TrailBlazer, GMC Envoy and Saab 9-7X sport utility vehicles through GMAC. The Saab 9-3 and 9-5 sedans also qualify for zero-percent financing.
The carmaker is also offering financing between 0.9 percent and 5.9 percent on more than three dozen other 2008 and 2009 models, including many trucks and SUVs. The deal runs through Jan. 5.
Many of the qualifying vehicles have seen big year-over-year sales declines and the automaker is eager to move them out of dealerships. TrailBlazer sales are down 42 percent through November compared with the same period last year. Envoy sales are off 49 percent.
The incentives come on top of numerous other deals offered by GM, which is struggling to boost sales and keep itself afloat. The GM is in the midst of its year-end "Red Tag" sale, and is also throwing numerous cash bonuses at willing customers.
Separately, GMAC said Tuesday that it will offer auto loans to customers with credit scores as low as 621, eliminating restrictions put in place two months ago that required a minimum score of 700.
Prior to the Treasury loan, which comes from the $700 billion bank rescue package, LaNeve said GM had difficulty tapping GMAC for one of its core functions: providing loans to car and truck buyers.
"Essentially, we couldn't even activate our finance company as an ally in trying to get deals done in the market," LaNeve told reporters. "I think what we're seeing today is a big improvement over that."
LaNeve also said GM was weighing a return to the leasing business, though it still lacks the financing to do so immediately. GM, along with other automakers, has dramatically scaled back customer leasing in recent months because used-car values have fallen so sharply that the practice has become too costly.
LaNeve said the previous restriction had sent a message to customers that GMAC was no longer in the financing business and added that the combination of lower credit qualifications and lower-cost loans should change that perception for consumers.
"It will certainly signal that GMAC ... is back in the game of financing vehicles," he said.
GM, along with Chrysler LLC, received approval from the Bush Administration for $17.4 billion in aid from the Treasury Department's TARP program. The loans require that the automakers submit a plan for viability by March 31.