If car companies are receiving a bailout, why are there still car commercials and advertising?

How do the car companies that currently need a bailout have enough money to continue to purchase advertising?

You have to maintain your presence it the market. There is a direct correlation between advertising and sales. Cutting the advertising budget would be the worst thing a company could do when they desperately need to increase sales.

Because that is called marketing. The last thing you want to cut is marketing because if you are not advertising your product people tend to forget about it. In business they teach the smart ones to actually increase marketing in a down market to keep the brand in front of people.

Bought and paid for in advance under contracts. Any business that does not advertise will fail. You may not see their ads on tv or hear them on the radio but money is spent in loads in print, a la trade magazines for engineering, manufacturing, agriculture and everything else.

Because they have a budget for advertising, and those funds are being spent according to plan. The problem is that consumers aren't purchasing enough cars and trucks to sustain the auto makers. There are a variety of reasons for this which include automobiles that are not as attractive and/or reliable as the competition and fewer choices in the value spectrum, i.e., stripped down, fuel efficient, inexpensive cars with a touch of style.

More recently, however, new car sales have gone over the cliff because of the substantial decline in home prices which have wiped out billions in homeowner equity, which has been an asset pledged to secure credit to purchase expensive new cars, and because of the decline in affordable credit available to consumers in the form of new car loans.

It's important to help the auto makers to survive this abrupt credit squeeze because their failure will result in the loss of between 1 to 2 million jobs within about 3 months. The cost of such a downturn to the American economy at a time when the economy is already severely contracting would be huge. Their failures would prolong the decline in aggregate consumer spending, spur additional housing sector problems, and further contribute to the loss of income and other tax revenues which support federal, state and municipal spending.

If you have a better plan to help the US economy stabilize and then grow, I would love to hear it. If not, then you might consider supporting a bridge loan that will keep our economy from getting much worse much quicker and set the stage for President Obama to demand a comprehensive plan from the auto makers for their long term viability as a condition for additional federal assistance.

By the way, the federal government is going to take first priority among all the corporate debt-holders and will receive warrants to purchase stock in the companies at attractive prices if they can turn themselves around. So the loans will be fully secured and the federal government will profit if the turnaround plans succeed.

The best example of why this is happening is if you remember when Lee Ioccoca took to the airways to sell Chryslers. It worked, and he managed to pull the company back on its feet, for that period of time.
A good advertising campaign will sell cars.

I am not sure those Ads are striking enough to sell anything, though. Maybe they need to borrow Steve Jobs, who used to put out those absolutely artistic and mind-boggling Ads for Apple.

I would guess that the car companies have contracted marketing...so they already paid for it or have a legal obligation to continue paying for the marketing/advertising...so they are going to have to shell out the money regardless. The only way to void the contracts is through Chapter 13(?) restructuring, this allows all contracts to be revisited and revised or canceled, in an attempt to save a struggling company.,

I am wondering that too. I wonder how much is spent on commericals for one of the companies, say GM. I know marketing is key, but sometimes its overkill.

Hopefully they wont receive a penny. Obviously they cannot manage money and need to file for bankruptcy like we would have to if we overspent. They are still throwing money around like it is a given they will get the billions they want. Bankruptcy is the only way to save them, not throwing money at a sinking ship. They don't want to make concessions or take a pay cut. So in my eyes they aren't worth bailing out anyway.The advertising is probably already paid for and needed to keep the business going.

The bailout will only go towards fat bonuses for executives, and a multi million dollar bonus for the CEO. Advertising is not affected.

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