GM Expected To Continue Leasing New Cars

August 4, 2009

Well, it’s official. General Motors, as well as its lending affiliate, GMAC, are expected to resume vehicle leasing as soon as August 1 following a yearlong suspension of all participation in the leasing markets.

Currently, GM is still in the process of establishing firm guidelines and ironing out the details of its vehicle-leasing program. In the beginning, the program would be limited to a select number of General Motors’ higher profile models, such as the Cadillac CTS.

A spokesperson from General Motors did not immediately confirm the automaker’s plans, but was able to provide a few hints regarding studies that have been conducted to find ways to reinter leasing in the upper end of the vehicle market.

General Motors has been in discussion regarding various proposals that would allow for more leasing options via banks, including GMAC.

One unnamed executive privy to the decision-making process said the following: “Credit is easing, banks have capacity and residual (vehicle) values have been steadily increasing.”

GM has not be idle but has play a serious role in making leasing possible again by attempting a variety of measures, including the increase of transaction prices on the new cars and trucks it sells. This example would help to stabilize the resale values of its vehicles.

With its leasing efforts limited to the Cadillac, General Motors would be making its first hesitant steps back into a style of financing that is entirely focused on those who are able to afford luxury automobiles, as well as buyer of costly sport-utility vehicles.

General Motors was forced to withdrawal from the auto leasing markets back in August 2008 when it had to compensate for losses on vehicle resale values. It was a move that left the market open to other automakers to cut a more competitive edge when looking for customers who want vehicle leasing. Before it pulled out of leasing, GM leased approximately 20% of all new cars it sold.