DETROIT -- General Motors is launching a bank credit card aimed at small-business owners.
A second new card will be offered to GM employees, retirees, dealers, suppliers and their families that puts restrictions on credit card rewards to rein in incentives.
Credit card purchases have become an integral part of GM sales.
"Last year we earned nearly 2.5 points of share though GM Card-related vehicle purchases," said John Smith, group vice president of sales, service and marketing in North America, at a press event last week.
The GM Business Card is targeted at small-business owners who purchase or lease as many as 50 vehicles annually. One percent on all purchases made with the card can be redeemed to purchase a GM vehicle. Card holders earn an additional 1 percent for parts and service purchases made at participating GM dealerships.
The GM Extended Family Card will be offered to GM employees, retirees, dealers, suppliers and their families.
The automaker wants to switch that group of GM Card holders to the Extended Family Card. One percent on all purchases made with the new card can be redeemed to purchase a new GM vehicle.
Current GM Card holders earn 5 percent on purchases as high as $500.
Some employees, retirees, suppliers and their families can use those card rewards in combination with other company new-vehicle discounts and consumer incentives.
After July 31, card holders will not be able to combine GM Card rewards with other discounts, and they can switch to the Extended Family Card.
Holders of the Family Card will earn 1 percent on purchases, which may be combined with other discounts and rebates.
About 5 percent of GM credit card members are eligible for the Extended Family Card.
"The cost to the corporation was unacceptably high in addition to the profit impact," says Jack Bowen, general director of the GM Customer Network.
GM has sold 4 million vehicles using GM Card rewards since the card's inception 11 years ago and expects rewards to be redeemed on about 400,000 vehicles this year.
The co-branded credit cards carry the MasterCard and GM logos.
The Business Card, which debuted Thursday, May 15, is from Chase Manhattan Bank USA N.A.
The Extended Family Card, which will be introduced in July, is from Household International Inc., a wholly owned subsidiary of HSBC Holdings PLC.
