General Motors Co.’s (NYSE: GM) Chevy has ended 2016 and started 2017 with extraordinary promotions, both in terms of financing and discounts. These include 20% cash back on some models, price cuts of over $10,000 on four SUVs and pick-ups, and perhaps most aggressive of all, 0% APR financing for 72 months. The 0% deal is good for 2017 Spark, Impala, and Sonic models

GM is in trouble because it has misjudged future sales, built up large inventories, and because of these laid off workers. Some analysts believe that the problems are largely due to low sales of small fuel efficient cars as people have turned to SUVs and pick-ups.

Discounts on the three models are understandable, based on sales through the first 11 months of the year. Impala sales are down 20% to 86,212. Spark sales are off .7% to 31,254. Sonic sales are off 15% to 48,884.

GM laid off 1,300 workers last month all inside the Detroit city limits. Slow sales of several models were to blame, according to CNN:

The Detroit plant makes the plug-in Chevrolet Volt, which has enjoyed strong sales this year. A new version that can travel farther on a single charge has driven a 59% jump in sales this year.

But two of the other models built there, the Buick LaCrosse and Chevy Impala, have reported sharply reduced sales this year as buyers increasingly shift from cars to crossover SUVs.

Ultra long term car financing is considered risky for both car companies, and buyers. As more and more months are available as terms, the problem has grown. CBS News reported:

Still, lenders aren’t only willing to make loans to less creditworthy borrowers, they’re also extending loan payback periods far beyond the typical 48 months. J.D. Power & Associates shows in the most recent quarter that loans of 72 months or longer accounted for more than 33 percent of sales, continuing the growth seen over the past few years.

As of the most recent quarter, 31.3 percent of all car owners owe more on their cars than the cars are worth, also referred to as being underwater or having negative equity. This may make it difficult for consumers to trade in cars when they go back into the market in a few years. “It’s something to be monitored,” said Deidre Borrego, a senior vice president at J.D. Power.

GM is playing a risky game. One the other hand, it has a large number of cars on lots which it cannot sell.

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