Auto Industry Feels Credit Crunch

Nearly 12 percent of new automobile sales were secured through home equity loans last year. In California, the figure was nearly 30 percent. Now, that source of funding has all but dried up in the wake of the mortgage lending collapse, according to a piece in The New York Times. Used car sales have also been affected with a flood of repos.

Consequently, the automotive industry--television“s single biggest ad buyer--is having its roughest year since 1995. Roughly 15 million vehicles are expected to be sold this year, compared to 16.2 million last year, The Times said. Automotive also reaches into metals, paint, trucking, parts and semiconductors. Through $4-a-gallon gas into the mix, and sales of high-margin luxury vehicles are sliding like a bald Goodyear on wet asphalt. The article describes an auto auction in suburban Detroit where a 2007 Lincoln MKZ sold for $13,000--$10,000 below Blue Book.

Meanwhile in the Motor City, GM bought out nearly 25 percent of its hourly work force. The automaker announced on Thursday that 19,000 workers accepted the buyout that would end their employ July 1. The company offered the package to its entire workforce of 74,000 people in the United States.

Television Broadcast contributor and local sales manager at WGCL-TV in Atlanta, Jeffrey Ulrich, addresses the challenges of the flagging automotive sector and its effect on the broadcast market in the June issue of the magazine.