Jul30
GMAC pullback from leasing in U.S.
DETROIT (Reuters) -- GMAC is considering ending subsidized leases on General Motors cars and trucks in the U.S. market, a step similar to the pullback the finance company has announced for Canada, according to an executive with a U.S. dealership briefed on the plan.
GMAC is controlled by Cerberus Capital Management, which owns 51 percent of its stock. The remainder is held by GM.
Analysts and auto dealers have said actions to tighten terms on lease financing by GMAC, Chrysler Financial and other lenders could further depress vehicle sales at a time when industrywide volumes are at their lowest level in a decade.
The end of subsidized leases on GM vehicles in Canada, which takes effect on Friday, follows a more sweeping move by Chrysler Financial to end vehicle leasing in the U.S. market, announced last week.
Chrysler LLC and Chrysler Financial also are controlled by Cerberus.
GMAC spokeswoman Gina Proia would not discuss whether the finance company would consider suspending vehicle leases on GM cars and trucks in the U.S. market.
"We have not commented on that," she said.
About 43 percent of the vehicles GMAC financed in Canada and the United States in the first quarter were financed through lease deals, a common way for automakers to reduce monthly payments for car shoppers.
GMAC, the largest auto lender in North America, does not detail its lease financing totals by value or geography.
In a slumping market led by sharp declines in sales of trucks and SUVs, most auto transactions, including lease deals, have carried an incentive or discount in recent months.
But U.S. automakers and their financing companies have been losing money on leases because of the sharp decline in resale values for trucks and SUVs in the face of record gas prices.
The drop in value for those light trucks, which still represent the largest share of sales for U.S. automakers, have also made it harder to finance auto leases through the securitization market.
Rocked by the downturn in the U.S. housing market and losses at its ResCap mortgage unit, GMAC has said it might not turn a profit until 2009. The finance company lost $2.3 billion in 2007.
GMAC is scheduled to report second-quarter earnings on Thursday.
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This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader
This story posted by LeaseTrader.com, the automotive service company that lets people transfer out of their Car Leases early. If you're looking to swap a lease or transfer out of your car lease, please visit www.leasetrader.com