GMAC was created in 1919 to help GM sell cars by making financing available to customers who didn't have the cash or access to bank loans. GMAC also helped GM dealers by floorplanning their inventories with wholesale loans.
Along the way, GMAC became one of the most solid, highly respected financial companies in the world, as well as a voice for reasonable, restrained borrowing and lending practices. It also became a steady source of income for the parent company.
GMAC's ingenious business model gave GM a competitive advantage. When credit dried up in tough times, GMAC was there for GM dealers and buyers.
It was so successful that other automakers wanted their own captive finance arms. Most, including Toyota, patterned their lending operations after the GMAC model.
This downturn is different. Because of the credit crunch, GMAC has cut back on retail leasing. GM dealers grumble that the finance arm isn't buying paper deep enough to support their sales operations.
By contrast, in a credit-crunched America, Toyota Financial Services has plenty of cash to lend. During the credit crisis and downturn in auto sales, Toyota has managed to be an aggressive marketer because of the strength of its captive finance arm and the automaker's access to cash.
It also helps that Toyota has a full range of vehicles. Toyota's new "Saved by Zero'' ad campaign touts a 0 percent financing program for 11 vehicles. It's the kind of marketing muscle GM used when its financing arm was stronger.
In 2002, after GM cranked up its "Keep America Rolling'' campaign, 84 percent of GMAC's retail finance and lease contracts in North America included GM-sponsored incentives.
It may be a coincidence that this time Cerberus Capital Management LP owns 51 percent of GMAC. But when GMAC is again a wholly owned captive finance arm of General Motors, customers and dealers can be certain that the lender has a strong vested interest in selling cars and keeping GM's factories running.