07/29/2008, 3:58 PM
GMC News
GMAC stopping subsidized car leasing in Canada, considering same in U.S.
After announcing it will stop subsidized car leasing in Canada as of August 1 earlier today as it struggles with mortgage-related losses, GMAC is now considering doing the same for General Motors cars and trucks in the U.S. While neither report is official, the sources are legitimate enough, and similar measures have been reported by Chrysler Financial. Both GMAC and Chrysler are majority owned by Cerberus Capital Management.
The Canadian news is attributed to GM spokesperson Gina Proia by The Wall Street Journal, while the rumors of the same in the U.S. comes from an executive at a U.S. dealership who was briefed of the plan. With 43 percent of all vehicles financed through GMAC in Canada and the U.S. being leased, one can only imagine the further drop in sales at the struggling automaker. Leasing allows customers to make lower monthly payments than financing, making the option more advisable for some, including business owners who switch vehicles every few years and write off the leasing costs.
To help boost sales, recent leases had an incentive or discount, but U.S. automakers were hit by huge losses as the high gas prices resulted in declining resale values for trucks and SUVs.
GM owns 49 percent of GMAC stock, with Cerebrus holding the rest. In 2008, the finance company may not post a profit, and also lost $2.3 billion in 2007. GMAC’s second quarter earnings are due to be reported this Thursday.
07/29, 4:20 PM
posted by:
jayjc08
Really? After a 2.3 billion dollar loss they “may not post a profit”?
Please LLN, stop opening questions just to provoke “certain” readers to post stupid nonsense, like all the recent reports about Chrysler going under, etc.. While ENTIRELY possible, it most likely won’t happen in the manner your reporting.
And another favor, please START posting damn sources! I don’t enjoy guessing whether or not your illustrations are legitimate (i.e. the recent Taurus illustration, etc.).
.
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Leases, mortgages, etc… IF possible I would stay away from any sort of debt, especially one that isn’t necessary.
07/29, 4:38 PM
posted by:
Need4SSpeed
Saw that coming… I forgot Cerberus owned majority stake in GMAC…
07/29, 5:13 PM
posted by:
xyunya
That will half GM “sales”.
07/29, 5:14 PM
posted by:
RaineMan
Well… looks like the end of domestic leasing period. That is really going to hurt them. Now all the folks that looked at leasing Malibus and Impalas will be going over to Honda or Toyota.
07/29, 5:23 PM
posted by:
johnnycanuck
If they’re already hooped on all the current lease deals, so be it. Doesn’t that mean any new lease deals could be written to reflect current conditions? Or is the residual value so far in the tank that you could move up 2 ranks in vehicle for the same payment going Japanese or European?
07/29, 5:44 PM
posted by:
frost
the thing is most GMAC lease Returns don’t even sell at auction for what they are worth. a 3 year old Silverado you can get as cheap as $7000 and that is with the more popular options in the truck. almost all GM cars and trucks have the worst resale values anywhere, even if they stopped offering lease their car line up would still suffer from the same crappy trade in / resale value.
07/29, 7:09 PM
posted by:
inline6
Residuals are dropping on SUVs and trucks, which hurts the American Three more than others, but hurts Nissan, Toyota, and Honda, too, in that order.
Residuals are rising on passenger cars. What you guys fail to understand is that GM and Chrysler vehicles aren’t exclusively leased from GMAC and Chrysler Financial. Other financial companies do leases, too. So it’s not like the options are going to go away.
The state of New York, for a time, ended car leasing of all types from all companies for awhile. Did that affect sales? Yes, but not disasterously.
Also, GM passenger car resale values have been skyrocketing since about 2005.
07/29, 7:29 PM
posted by:
beatusmongous
My first financial was through a local bank, and my latest was through Chase. The next one will probably be through my credit union.
07/29, 8:21 PM
posted by:
brassmonkey
I didn’t know Cerberus owned the other part of GMAC. Can’t help but laugh. How bad is this whole banking and credit thing going to get?