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Detroit Needs Some New Ideas

By Rich Duprey - Updated Apr 5, 2017 at 8:08PM

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Bailouts are going to fix what ails carmakers.

While Detroit seems to have just about given up on leasing as a way to make money, other automakers want to make the most of it.

I got a call from my Mercedes dealer, offering me the opportunity to make no more payments on my lease if I agreed to lease another model from them. Considering my lease is up in May, and I already know I'll want another car afterwards, it sounded like a promising deal.

At least, it did -- until they told me the attractive terms they were offering were for the old CLK model I used to own. The CLS I drive now only had three months of payment forgiveness available, and I still have another six months to go on it. Mercedes says they'll be in touch.

It's a smart move, particularly when you can't hit up a rich Uncle Sam, like General Motors (NYSE:GM) and Ford (NYSE:F) are trying to do. You need to come up with some innovative approaches -- and although my current car is an extravagance I'm not likely to repeat, the Daimler (NYSE:DAI) unit is taking charge here, and doing its best to keep a customer in a Mercedes.

Toyota (NYSE:TM) is using low- and no-interest financing to pull in customers, as is Nissan (NASDAQ:NSANY). But many car companies have tightened up their credit requirements for low-interest loans, effectively choking off financing for many potential borrowers.

Chrysler stopped leasing cars altogether, while Ford said it wanted to make its once-popular F-150 pick up trucks "lease-proof." Of course, with gas prices dropping below $2 a gallon, Ford wants to fire up the pickup assembly lines again. Talk about spinning your tires.

It's only reasonable for carmakers to try to get handouts when everyone else is. And it's becoming a global phenomenon, with France considering helping out its domestic carmakers and Germany reviewing GM's Opel unit's request for assistance.

There's no doubt that carmakers around the globe are reeling from dried-up U.S. demand. But maybe the ultimate success lies not in seeking handouts, but rather pulling yourself up by your bumpers to keep customers driving your cars.

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Ford Motor Company Stock Quote
Ford Motor Company
F
$15.83 (2.13%) $0.33
Toyota Motor Corporation Stock Quote
Toyota Motor Corporation
TM
$158.60 (0.45%) $0.71
General Motors Company Stock Quote
General Motors Company
GM
$38.46 (1.34%) $0.51

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