Snags in GMAC’s Plan

Since posting a $2.5 billion second-quarter loss earlier this week, GMAC LLC has devised a series of moves meant to get it back on track. But in my estimation, the plan alienates both of its major customer groups: dealers and consumers.

For starters, dealers will have to pay higher interest rates on their inventory financing. Barbara Stokel, GMAC’s executive vice president of North American operations, has informed dealers that floorplan financing rates will climb by at least 0.5% come Sept. 1. If I had to guess, the half-percentage-point increase will be just the beginning.

Also, GM dealers will have fewer financing options in their arsenals with which to lure potential car buyers, as the mega-financier ends its SmartBuy program, exits leasing in Canada, and reduces subsidized leasing in the United States. Compounding the issue is that vehicle sales are already hurting, and dealers are looking for more — not fewer — ways to drive showroom traffic.

With funding options curtailed, consumers will likely be spurred to find alternative lenders, further eroding GMAC’s marketshare. Car buyers are after the best deal, whether it’s offered by a captive, bank, credit union, or a complete stranger on a peer-to-peer lending site like Prosper.com or LendingClub.com.

Will GMAC recover? That remains to be seen. If the Cerberus-owned company can weather the current storm, its next order of business will be to lure back dealers and consumers — maybe the harder of the two tasks.