GMAC Financial Services today (April 5) announced that it will provide consumer financing for recreation vehicles and has been selected by Thor Industries Inc. as the preferred financial provider for its retail customers, according to a news release.
Thor is the world’s largest manufacturer of recreation vehicles, including brands such as Damon, Four Winds, Airstream, Dutchmen, Komfort, Breckenridge, CrossRoads, General Coach and Keystone RV. GMAC will begin by extending retail financing through Thor dealers in 14 high-volume states, and eventually expand nationwide to all 1,200 dealers that comprise Thor’s U.S. network. The company expects to accept retail financing applications from dealers for both new and used RVs, beginning in May.
“The RV financing market is a natural extension of our auto business,” said GMAC President Bill Muir. “We have the infrastructure and servicing capabilities to add the RV business to our portfolio. Further, many of GMAC’s current and prospective auto customers are interested in using their vehicles to pull towables, so the new relationship with Thor brands makes a lot of sense for both our business and customer base.”
GMAC intends to hire current employees who manage Thor Credit services, including industry veteran Ed Arienti, who will lead the RV finance initiative at GMAC. Thor will continue to offer retail financing to its dealers until GMAC launches its program, at which time Thor Credit will cease new loan activity.
“We are pleased to select GMAC as the preferred financing provider for Thor Industries, particularly as we seek to satisfy increased demand for our recreation vehicles with a positive sales and financing experience,” said Thor Chairman and CEO Peter Orthwein. “Thor dealers and their customers will benefit from having GMAC as a retail financing option.”
The U.S. RV market has been growing since mid-2009, and is expected to reach more than 215,000 units in 2010. Thor Industries currently holds 27% of U.S. RV market share. “The RV industry represents high-quality business and is currently under-represented by the financial community,” Muir said.
In addition to providing consumer retail financing, GMAC will offer remarketing services to RV dealers for used or traded-in recreation vehicles through its SmartAuction online site.
About GMAC Financial Services
GMAC is a bank holding company with 15 million customers worldwide. As a global financial services institution, GMAC’s business operations include automotive finance, mortgage operations, insurance and commercial finance. The company also offers retail banking products through its online bank, Ally Bank. As of Dec. 31, 2009, GMAC had approximately $172 billion in assets. Visit the GMAC media site at http://media.gmacfs.com for more information.
Although it’s hard to say how much all this carries over to the recreational vehicle arena, The Wall Street Journal indicates that car dealers, auto-finance companies and credit-market analysts are seeing “a decided spring thaw” in the auto-finance market — especially for drivers with good credit.
Today, “if you have a job, and there’s equity in the loan … that’s it,” says Ed Gorham, director of the finance department at Planet Honda, one of the biggest Honda dealers on the East Coast. In many cases, customers don’t need down payments, he says, and people with FICO credit scores as low as 400 are getting loans.
Right now, GMAC Financial Services is offering 0%-interest loans and discounted leases to help GM and Chrysler boost sluggish sales. GMAC is offering a $499 a month, 39-month lease on the Cadillac CTS with $1,000 down — or nothing down for customers already driving vehicles leased from GM. However, the penalty for driving more than 39,000 miles is 20 cents a mile.
Honda and Lexus dealers are also offering aggressive lease deals — pushing leasing to more than half of current deals.
Data compiled by Informa Research Services Inc. and J.D. Power and Associates suggest the thaw is real and widespread, the Journal’s Joseph B. White writes. For example Informa’s analysis of the rates lenders are offering to consumers in different credit tiers shows that between January 2009 and March 2010, the average rate offered to consumers with top-drawer credit — FICO scores in the range of 720 to 850 — dropped to about 5.8% from 7.1%.
Customers with middle-tier FICO scores in a range of 660-689 were being offered loans at an average rate of about 9.4% in early March, down from an average of 10.2% in January 2009, the WSJ continued. But people whose credit scores fell below the 660 level were offered loans earlier in March at average interest rates of about 13.2% — up from about 12.9% in January 2009.
After the late-2008 financial-market meltdown, getting customers with credit issues into a new car loan was hard work. Customers needed to put down a third of the car’s price or get cosigners if their credit scores weren’t top notch, Gorham observed. Now, even the consumer with a weaker credit score might get the loan as opposed to being denied, dealers report.
Chrysler LLC filed for bankruptcy protection today (April 30) and will form an alliance with the Italian carmaker Fiat Group SpA in an effort to revive the nation’s ailing third-largest automaker, according to The Associated Press.
The Obama administration said it had long hoped to stave off bankruptcy, but it became clear that a holdout group of creditors wouldn’t budge on proposals to reduce Chrysler’s $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline.
“No one should be confused about what a bankruptcy process means,” President Barack Obama said in a midday announcement. “This is not a sign of weakness but rather one more step on a clearly chartered path to Chrysler’s revival.”
Chrysler filed for Chapter 11 bankruptcy protection in New York with the hopes of emerging in as little as 60 days under the new partnership with Fiat. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.
The deals give Chrysler “a new lease on life,” Obama said.
“This is not a sign of weakness,” he said. “I have every confidence that Chrysler will emerge from this process stronger and more competitive.”
Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties. But Chrysler said Thursday that it will idle its plants during the legal proceedings. The company’s chief executive, Robert Nardelli, said he will leave when the bankruptcy is complete.
When that occurs, the Auburn Hills, Mich.-based automaker would end up owned by the United Auto Workers union, the U.S. government and Fiat. The Canadian and Ontario governments, which are also contributing financing, would have small stakes.
But Fiat, which the Obama administration hopes can jump start Chrysler with its fuel-efficient and lower-emission technology, could end up the majority stakeholder. Fiat would initially get 20%, a share that could rise to 35% if certain benchmarks are met. Fiat said Thursday it could get an additional 16% by 2016 if Chrysler’s U.S. government loans are fully repaid.
Obama said Chrysler Financial, the arm of the company that makes loans to buyers and to dealers to finance their inventories, will be merged into GMAC Financial Services, once General Motors Corp.’s finance arm. The new GMAC will get government support. Chrysler’s base of dealers would also be pared down.
The Treasury Department’s auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation’s automakers.
Along with the Fiat deal, the UAW ratified a cost-cutting pact Wednesday night.
Treasury reached a deal earlier this week with four banks that hold the majority of Chrysler’s debt in return for $2 billion in cash.
But the administration said about 40 hedge funds that hold roughly 30% of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and they were holding out for a better deal.
“I don’t stand with them,” Obama said.
A person briefed on Wednesday night’s events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.
On Thursday, a group of funds identifying themselves as 20 of Chrysler’s “non-TARP lenders” released a statement saying they had been sidelined during negotiations between lenders and the government. The group, which said it holds $1 billion in Chrysler debt, complained that the four banks were “obviously conflicted” because they had accepted money from the government’s Troubled Asset Relief Program while they had not gotten TARP money.
The group said its offer to the Treasury Department to reduce its claim to 40% was “flatly rejected or ignored.”
Fiat is getting its stake in Chrysler for giving the company access to its fuel-efficient technology, a move toward cleaner cars that the Obama administration thinks is critical to Chrysler’s future survival. The company has committed to building Fiat cars in Chrysler factories, to be sold as Chryslers.
Obama’s auto task force in March rejected Chrysler’s restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat.
Chrysler’s bankruptcy filing said it owes more than $10 million apiece to 20 of its unsecured creditors, many of whom are vendors and suppliers.
At the top of that list were: Ohio Module Manufacturing Co. ($70.3 million), BBDO Detroit Inc. ($58.1 million), Johnson Controls Inc. ($50.3 million), Continental Automotive ($47 million), Cummins Engine Co. ($43.9 million) and Germany-based Germersheim Spare Parts ($36.2 million).