Tight credit and deep uncertainty about the direction of the nation's economy brought on by the current economic crisis are making life tough for the Big Three domestic auto firms as well as their dealers.

"We've gotten to the point now where only those with unblemished, flawless credit are getting approved for auto loans," said Joe Barker, senior manager of North American Vehicle sales forecasting for CSM Worldwide in Northville, Mich.

Dealers say subprime borrowers, those with credit scores of around 600 and below, have been pushed out of the market by banks and automakers' finance companies that are fearful of lending to high-risk customers. GMAC, Ford Motor Credit Co. and Chrysler Financial Services are in worse shape than the Japanese automakers' credit arms. The Japanese companies can raise money more easily because they have better credit ratings and thus can offer better loan terms, said Mike Jackson, chief executive officer at AutoNation Inc., the country's largest dealership group, based in Fort Lauderdale, Fla.

Mr. Jackson said tougher credit requirements from banks and finance companies and limits on money to fund leases have cost his 250-store chain about 20 percent of its sales volume so far this year.

"It's a huge problem," he said. "The volume of the industry for both manufacturers and retailers is being dramatically restrained by credit."

At # 1 Cochran, which has dealerships in Monroeville, the South Hills and Robinson, Rob Cochran, the group's president and chief executive officer, said he's noticed tightening of credit locally, too.

"What I would say is that the banks are certainly more sensitive. Depending on the bank, they have various degrees of caution," he said.

"We're not strangling, but we have seen the impact of credit tightening here. And while it's not impossible for a person with poor credit to get a car loan, it will be difficult," said Bill Gray Jr., who owns Volvo, Buick, Pontiac and GMC dealerships throughout the South Hills.

"Credit is already difficult to get, and the current situation will only make it much, much worse," said Peter Morici, a business professor at the University of Maryland and an analyst of the auto industry.

Against the backdrop of tight credit and a crumbling economy, at least one company, General Motors Corp., is trying incentives as a way of drawing customers to the showroom.

GM, whose sales plummeted 16 percent last month, on Wednesday replaced "employee pricing" discounts with zero-interest financing for as long as six years on many 2008 models. The incentive runs to Nov. 3.

The longest loans are available on large sport-utility vehicles like the GMC Yukon and Chevrolet Suburban, as well as the Pontiac Grand Prix sedan. Alternatively, GM is offering up to $7,000 cash on some vehicles, said company spokesman John McDonald.

"You need to keep changing the offers to give buyers the opportunity to find the most value," he said.

That kind of incentive program is appreciated by dealers.

"We were here until 11 p.m. Tuesday night with the GM employee pricing program," said Joe Gray, general manager at NorthStar Chevrolet in Moon.

While the incentive program stanched the bleeding at GM, Ford and Chrysler posted drops of more than 30 percent in sales last month. Ford Motor Co.'s 34 percent decline marked its worst sales month this year. Chrysler LLC's sales tumbled 33 percent.

Leasing also has taken a dive at many dealers.

"GMAC has shied away from leasing, but those who are coming off their leases are being compensated by GM with additional money for purchasing instead," Mr. Gray said.

Any improvement in the credit picture or in finding solutions to the financial crisis will be too late for some dealers.

"There has been a trend of consolidation and thus a declining number of dealers for some time. But in the current situation, there are dealers out there that were highly leveraged and relying on credit. When the market turned sharply on them in the spring and summer, that was essentially the death knell for highly leveraged dealers," said Jack Nerad, editorial director of Kelley Blue Book.

One such casualty was Bill Heard Enterprises Inc., which was one of the largest Chevrolet dealers in the United States. It included 14 Chevrolet dealers in Florida, Georgia, Alabama, Tennessee, Texas, Arizona and Nevada. The dealerships all closed last week, and more than 3,000 people lost their jobs. The chain had brought in about $2.1 billion in revenue to GM.

According to a Wall Street Journal report, 60 car dealers had closed by midsummer. The decline in the number of new car dealerships will accelerate this fall and into 2009 as weak sales, increased operational costs and the credit crunch continue to take their toll, according to Grant Thornton LLP Corporate Advisory and Restructuring Services.

"An increasing number of dealers are simply closing their doors because sales have plummeted, credit has dried up, the overall retail environment is increasingly challenging and potential investors are sitting on the sidelines," said Paul Melville, a Grant Thornton LLP partner.

The local dealers that will have the hardest time right now "are those dealers around here that are married to one brand," Mr. Cochran said.

"If that brand isn't doing well, there's likely to be challenges with that particular dealership. The dealers that are having more success are the ones that have more diversity in their brand portfolios."

Meanwhile, the car companies themselves may end up short of cash to operate if a solution to the credit crisis is not found quickly, Mr. Morici said.

"The auto industry may well be the second-biggest victim of [the economic meltdown]," Mr. Morici said.

"Two or three weeks from now, if they do something to help the banks, it may be too late for the auto industry. Detroit will be in for a very hard winter."

Officials at the Big Three car companies say they are looking for alternative ways to raise and conserve cash as a result of the crisis, and they are cutting back on advertising, product programs and other budget items.

"The auto industry hasn't got that much left to cut. ... They just don't," Mr. Morici said.

"I absolutely think it will affect future product development," Mr. Nerad said. "I was talking to a friend of mine at GM three weeks ago, and he said they were losing engineers to attrition and layoffs at a rapid rate. And when you lose them, you're losing research and development. And I'm certain that the same thing is happening at Chrysler and at Ford Motor Co."

The domestic auto industry is clinging to two financial life preservers. Congress approved a $25 billion loan program to help the Big Three pay for more fuel-efficient cars and trucks.

The loans can be used to retool assembly plants, help suppliers or engineer cars and trucks. None of that money is affected by the credit and financial crunch, industry officials say.

The other bright spot is that the new union contract with the United Auto Workers is going to help save billions of dollars in retiree health care costs.