Car Companies

Watch the nightly news and you can’t help but wonder. Which car companies will be here tomorrow? It’s not just the American car companies that are under siege in this economy. The downturn has hit hard across the board and on every continent. The bright spots are few and far between. There’s little doubt that the sea change will lead to massive consolidation within the industry, and if you’re in the process of buying a car (or about to start), you can’t help but worry.

We know that the list of domestic car companies’ offerings will shrink. General Motors will soon shed Hummer, Saturn, and Saab, with Pontiac becoming a niche brand within a brand. While Ford is in the process of shopping Volvo, there’s a better chance that the marquee will stand.

The bigger question perhaps, is which imported car companies will follow the lead of Isuzu (among others) and pull back from American sales? With the contraction in the jumbo luxury SUV market, the inevitable departure of Hummer cannot bode well for Land Rover.

It’s clear that the days of living high on the hog are over. Which car companies not presently in the States will gain a foothold? Cheap cars are the future, but it will take consolidation and creativity to survive. Will we actually see the return of Fiat and Alfa Romeo, through a tie-up with Chrysler, or is it a myth? Could Peugeot slip back in with Mitsubishi, and Renault with Nissan?

With the domestic car companies reluctant to introduce highly fuel efficient clean diesel-powered vehicles, the door has been opened to the world’s automakers – most specifically the Europeans – like never before.

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Buy a Car … Now?

Buckle up, kids. With the economy on the skids, and two out of the three American automakers facing bankruptcy, we’re in a paradox: this could be the best time ever to buy a new car. New car sales are in a deep tank and dealerships are desperate to unload their inventory before their doors close for good. We’ve never seen this level of discounting. Make no mistake about it, there are remarkable deals out there for car buyers who have the financial wherewithal to complete the transaction.

Updated 2/13: The US Senate has moved to sweeten the deals, by tacking on automotive purchase income-tax deductions onto the economic stimulus bill. The auto amendment was adopted with broad support (71-26) in the Senate. While the full stimulus measure has passed both the Senate and the House, there were reductions in the tax break.

The bottom line? Folks who buy a new car in 2009 will be eligible to deduct sales taxes on the purchase. The big if remains …whether funds will be available for those loans and whether prospective buyers will qualify.

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