General Motors Plans to Resume Leasing Cars

General Motors Co. — which incurred over $80 billion in losses over the past four years and emerged from bankruptcy protection July 10 — together with its former finance arm, GMAC, are expected to resume vehicle leasing as early as August 1 following a year of absence from the leasing market, The WSJ reported Tuesday, citing people familiar with the matter.

The leasing-related details of a vehicle-leasing program with banks  including GMAC, are still being worked out, and it is still unclear what kind of leasing deals GM will support for other brands. What we do know however, based on the Journal’s report, is that GM leasing-programs would be initially limited to some of GM’s higher-end models, such as the Cadillac CTS.

“Credit is easing, banks have capacity and residual (vehicle) values have been steadily increasing,” one person close to GM’s decision-making said. [WSJ]

GM, which prior to pulling out of leasing-program, leased about 20% of the new vehicles it sold, decided last year to stop leasing its vehicles after posting massive losses due to the sinking resale values of certain vehicles. With most people unable to obtain financing for new vehicles, the disappearance of the leasing option undoubtedly weighed on 2008’s troubled automotive market and GM’s already bleeding balance sheet.

The re-entrance of the American automaker in the leasing business, even on a limited basis, is a good indication of the company’s intentions to get back in the game full force at some point.

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