Ultra_Nexus

Well, what a good idea - if the banks can get extra credit, why not become one?

http://business.timesonline.co.uk/tol/busi...icle5397527.ece

Survey S2000

I read that US car companies have not been able to turn a profit from car manufacturing for for years now..... which i thought seemed strange as thats what there supposed to be good at.

It turns out that they were able to make their business viable by financing the car for their customser.

Seemed risky to me as you could get finance on any street corner, probably not so much in todays market.

Fieldl

GMAC have been a bank in all legalise for years though. All the manufacturers have a similar concept. IIRC Porsche or BMW made more profit from their lending arms than the manufacturing. Bet that isn't the case anymore. Wasn't there a rumour of a upgrade list knocking around BMW dealers that they were targeting people to change their cars as the residuals booked are miles away from actual current values. Next 12 months will see lots of finance and lease companies get burned when they realise the residuals they have been giving are fantasy.

GMAC differ as they got into home loans as well. IIRC Bradford and Bingley bought an option on their UK loan book for a bloody fortune last year. They were primarily seriously sub-prime mortgages with sky rocketing rates of arrears and many people facing climbs in interest rates after introductory deals. Just like in the States.....

Nick Graves

It'll be interesting to see what happens to BMW; they are the default sales reptile choice due to the cheap leasing, which will probably have to end right about now.

For anyone considering self-employment; look at GM. Whatever they do is invariably an object lesson in how not to run a business. GMAC over here had to sell its mortgage and HP arms years ago due to bad loans, GM couldn't brand manage their way into a paper bag let alone manufacture a reliable one...

GM is simply so big they make money out of their money, for just long enough to survive. Probably the day of reckoning is overdue.

GarethB

It's not unusual. For years Dixons Groups (and others) made minimal margins on the product but made money on credit agreements, specifically if you hadn't paid off the balance after the interest free period ran out.

Oh, and warranties.

Nick Graves