You’ve got your eye on a great new Jeep Grand Cherokee, or maybe a new Chrysler convertible, but should you buy a car from a bankrupt company?
That’s a question a lot of folks are asking these days, now that the automaker has filed for Chapter 11, hoping to emerge a stronger, healthier company partnering with Italian carmaker Fiat.
For a lot of potential Chrysler customers, the answer has apparently been “no.” The overall U.S. auto market slipped by 34 percent in April, but the troubled Detroit company plunged 48 percent, reflecting consumer fears in general and concerns about the company’s health in particular.
Yet, some analysts say this may be a great time to buy from Chrysler -- and from General Motors -- the other domestic maker facing the threat of a White House-guided bankruptcy.
Why? Well, for one thing, the Obama administration has been actively involved in Chrysler’s turnaround effort and is speeding the company’s Chapter 11 filing through the courts. Arguably, the administration wouldn’t be willing to risk billions more in aid if it didn’t think Chrysler was likely to survive.
Perhaps more convincingly, the president has given the OK to a government-backed program that will ensure that vehicles sold by Chrysler -- and GM -- have their warranties honored, even if the companies did go out of business, which seems far less likely than it did a couple of months ago.
There are even more compelling reasons this month. Chrysler has launched a new “Invest in America” campaign, offering buyers up to $6,000 in cash on a new Chrysler, Dodge or Jeep car, truck or crossover. Everyone qualifies for a minimum $4,000 on a new 2009 model, while existing Chrysler, Dodge or Jeep owners will get another $1,000 “loyalty” incentive.
Then there’s another $1,000 in cash back if you line up a loan through any of the 1,500 qualifying U.S. credit unions.
A recent study by CNW Marketing suggests that American auto buyers are more worried about credit than they should be. As many as 800,000 potential customers stayed out of the car market during the first quarter of the year thinking they wouldn’t qualify for loans that CNW found they would have been eligible to sign up for.
It’s not likely Chrysler can convince everyone it’s a safe bet, but it’s certainly going to try. If it’s going to achieve a turnaround, it needs every sale it can get. And with protected warranties and big incentives, it may justify your interest if you’re now in the market.
Paul A. Eisenstein is an award-winning journalist who has spent more than 30 years covering the global auto industry. His work appears in a wide range of publications worldwide, and he is a frequent broadcast commentator on subjects automotive.
