Captive Finance Companies Gain

In the aftermath of the tragedy in New York, many consumers hesitated to buy new cars. According to CNW Marketing/Research, floor traffic at auto dealers fell dramatically. Consumers were concerned about the future of the economy, as well as their possible unemployment. Moreover, as noted in the early part of this issue of Spotlight, many consumers were already heavily in debt. General Motors was the first to react to the shock and responded with its offer of zero percent financing. (That rate was, of course, available only to customers with excellent credit ratings.) But, floor traffic came close to returning to its earlier levels. Ford and Chrysler quickly followed suit. The strategy paid off. The portion of automobile installment contracts placed with captive finance companies rose from 48.1 percent prior to September 11 to 72.3 percent following the attack.