Published: January 07, 2009 11:14 pm      

Chrysler, GM expand low-rate plan

DETROIT -- General Motors Corp. is expected to confirm today that it is expanding its initiative to offer credit union members access to lower loan rates on top of discounts on new vehicles. GM will join Chrysler LLC in making the offer available through credit unions in all 50 states.

Last month, GM announced the "Invest in America" initiative with the Michigan Credit Union League that allowed 1,200 credit unions in Michigan, Illinois, Indiana and Ohio to offer attractive loans as well as about 4.5 percent off the manufacturer's suggested retail price. The program made $10 billion in auto loans available to car buyers

Chrysler soon joined the program, designed to help consumers unable to get credit in today's tightened lending market, but expanded it from four states to 12, making $22 billion in loans available to 25 million customers. Chrysler also offered a larger amount up front: a minimum of $500 to $1,000 depending on the vehicle, layered on top of other incentives. GM's bonus cash offer was for $250 in a deal good until Jan. 5. But the overall campaign runs through June 2009.

In a sales call with the media on Monday, Chrysler executives announced the program would be expanded to all 50 states.

The League also is talking to Ford Motor Co. about participating. Credit union officials say there are no plans to offer financing to carmakers beyond the Detroit Big Three as the focus of the initiative is to boost the domestic automakers.

The number of Americans shopping for new cars and trucks has dropped sharply in recent months, while many Americans no longer qualify for new car loans because of tighter lending requirements.

U.S. auto sales slumped 18 percent in 2008 as volatile energy prices, rising unemployment, and the housing slump drove consumers to the sidelines. At GM, sales dropped 23 percent last year, while Chrysler and Ford saw demand fall 30 percent and 21 percent, respectively.