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.
