New Dealership Incentives From GMAC

AP Story

NEW YORK — GMAC Financial Services, the former financing arm of General Motors Co., is making a new push to recapture its share in the auto financing business by offering incentives to its most loyal dealers.

The government-subsidized lender starting Oct. 1 will offer cash incentives and services to its U.S. dealers, spokeswoman Sue Mallino said Thursday. The program will be called Ally Dealer Rewards — named after its newly rebranded consumer banking arm Ally Bank — although the program will be administered by GMAC's automotive unit.

GMAC's decision to brand the program under its Ally name signals the growing importance of the brand, Mallino said.

"We were just extending the (Ally) brand name through this program because it connotes an advocacy for the customer," she said.

GMAC rebranded its banking division earlier this year, hoping to smooth over its image and lure new customers after its ailing finances forced it to accept billions of dollars in government assistance.

In May, the Treasury Department announced a new $7.5 billion injection for GMAC. It was GMAC's second shot of cash from the government, though it was short of the $11.5 billion that the government's "stress test" showed it needs to stay afloat if the economy worsens.

The Treasury now has a 35 percent stake in GMAC.

Mallino likened GMAC's new dealer incentive program to rewards programs offered by credit card companies to frequent users. Dealers who use the full complement of GMAC services, she said, will be rewarded with cash, remarketing services or other perks.

GMAC rebranded its banking division earlier this year, hoping to smooth over its image and lure new customers

The program will not have any bearing on GMAC's lending to consumers seeking auto loans, Mallino said.

The move is GMAC's latest effort to recapture its once-dominant share in the auto financing market. Recently, the company became the preferred lender for Chrysler Group LLC and has begun offering leasing again to both GM and Chrysler customers.

Leasing virtually collapsed during the financial crisis as the resale value on leased cars plummeted and the practice stopped being profitable for lenders.

GMAC's market share in the auto financing market has fallen sharply during the crisis as its cash available for lending declined. Banks like J.P. Morgan Chase and Wachovia, meanwhile, scooped up new business.

GMAC had 3 percent of the auto financing market in the first six months of the year, down by almost half in the same period a year ago, according to Experian Automotive.