Checking the state of the auto industry
Reports say GM and Chrysler have stepped up merger talks, with GM running out of cash. Toyota, on the other hand, is promoting a new zero-financing initiative for 11 models. Ashley Milne-Tyte has more.
General Motors Chairman and CEO Rick Wagoner (William Thomas Cain / Getty Images)
More on The Economy, Auto Industry, America's Financial Crisis
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Kai Ryssdal: All right, that's real estate [previous story]. What about cars? How does General-Chrysler Motors strike you? There are reports today say GM and Chrysler have stepped up their merger talks. GM is said to be short on cash and looking to cut costs. Just recently, its financing division, GMAC, announced it's going to tighten up on new loans that it issues.
Toyota, on the other hand, doesn't appear to have any such qualms. This week, the company offered a new zero-percent financing program. So does that mean that Toyota's stronger than the rest in a flailing auto market? Ashley Milne-Tyte reports.
Ashley Milne-Tyte: You could look at it that way. Michael Robinet is vice president of global vehicle forecasts for CSM Worldwide. He says Toyota can afford to grant zero-percent financing, while its rivals can't.
Michael Robinet: There's no doubt that Toyota has vast resources, greater than almost any vehicle manufacturer in the world. It's in their best interests that they are able to use those resources.
He says Toyota is probably looking back to GM's successful post 9/11 sales campaign. It's hoping this effort will help it shift more vehicles. Which brings us to the bad news: Toyota's sales plunged 32 percent in September. Peter Brown is editorial director of Automotive News. He says Toyota's been growing for 15 years, so that downturn was a shock.
Peter Brown: The parent company at home back in Tokyo who's been making more than $10 billion every year is suddenly having to do profit warnings, so they're in the same boat as everybody else.
He says Toyota's making the most of its U.S. competitors' problems.
Brown: They're running a big ad campaign going, "We got plenty o' dough, don't worry about that, there's lots of dough. If you wanna buy a Toyota we can finance that baby, unlike a lot of other people." But at the same time, they're also giving away the money to try to keep the factories running.
Brown says demand for new vehicles won't pick up until the economy does. But he says Toyota's betting that anyone who's on the fence about a new car will take the bait of free credit.
In New York, I'm Ashley Milne-Tyte for Marketplace.
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