GMAC to Return to Leasing

Jan. 12 - Never mind the sleek, flashy models (nor the cars either) in Detroit, the big news out of the North American International Auto Show was announced on the sidelines this past weekend.

GM's sales chief for North America, Mark LaNeve, told Reuters, "We're looking to re-enter the leasing business on at least a limited basis at some point in 2009." GM's finance company General Motors Acceptance Company (GMAC) stopped accepting vehicles leases last year, as the North American economy ground to a halt. Chrysler's finance arm took similar measures as well.

Seperately from the White House-driven $13.4-billion automotive industry loan guarantees, GMAC received authorization to operate as a bank, in which the U.S. Treasury also took a $5-billion position. This will help GM sell more cars in 2009, according to GM's COO Fritz Henderson. "We were constrained on what we could do on APR, just in terms of regular retail financing."

Learning from its past, the company intends to be more careful as it re-enters the market. "You don't need to lease pick up trucks," LaNeve said. "You need it more in the Northeast than you do in Texas." Inexpensive leasing was a significant growth factor, bringing the market to the level of 17-million vehicles per year.

The approach cannot continue, however, when the company has forecast U.S. auto industry sales of between 10.5 million and 12 million vehicles in 2009.