GMAC to stop offering leasing incentives in Canada
By John McCrank
TORONTO (Reuters) - Leasing incentives for General Motors (GM.N: Quote) vehicles will no longer be offered in Canada, finance company GMAC said on Tuesday, a shake-up in strategy that underscores the growing pressure on North American auto sales from tight credit market conditions.
The move, which takes effect on Friday, follows a more sweeping decision last week by Chrysler Financial to end incentives for vehicle leasing in the U.S. market.
Both GMAC and Chrysler Financial are controlled by private equity firm Cerberus Capital Management.
GMAC spokeswoman Gina Proia would not discuss whether the finance company would consider ending incentives on 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 through lease deals, a common way for automakers to reduce monthly payments for car shoppers.
Now that GMAC has stopped subsidizing leases in Canada, monthly leasing costs are going to go up for consumers considering a GM vehicle, said Anthony Faria, analyst at the Auto Research Center at the University of Windsor, Ontario.
"They are going to use far, far, far more conservative estimates, much lower value of the vehicle at end of lease, and that obviously has to translate to much higher lease payments," he said. Continued...