GMAC Is Here To Help. Unless You're A Dealer.
Good news, everyone! A finance company whose risky investments in auto and real estate loans required it to beg for $6B in bailout cash is at the ready to teach you the secrets of smart financial planning. According to a release at PR Newswire, GMAC “has bolstered its effort to provide consumers with personal finance education with a $20,000 grant to InCharge® Education Foundation, Inc. (ICEF). The funding will be used to co-sponsor a series of financial literacy courses throughout the country in 2009. The courses, named ‘Smart Edge by GMAC,’ are designed to help people make better financial decisions by providing them with information about budgeting, real estate and automotive finance, insurance, credit reports, credit scoring, and other tools.” Lesson number one? Pay your CEO $11.6M even if you’ve been bleeding red ink all year. Lesson number two? Savagely screw over the people your business relies on.
GM and GMAC have stripped All American Buick Pontiac GMC of Marshall County, Texas, of its entire inventory after a court overturned a restraining order against the automaker and its finance arm, reports the Marshall News Messenger. All American’s lawyers have hit back, filing a a federal complaint alleging fraudulent inducement, fraud, fraudulent misrepresentation, fraud by nondisclosure and promissory estoppel (known to you and me as an “action which prevents a party from acting in a certain way because the first party promised not to, and the second party relied on that promise and acted upon it”).
According to the lawsuit, GMC did not halt vehicle shipments during the recent sales downturn. “Rather, GMC continued to ship vehicles to All American until its floor plan was maxed out at 100 percent. The floor plan interest commenced the day the vehicles were put in transport.” The suit also claims GMC began requiring dealerships to pay up front for all ordered parts. Meanwhile, GMAC required All American to pay additional money for all used cars that were sold as well as reductions on used cars. Finally, GMC stopped paying dealer rebates due on new vehicle sales on a weekly basis, opting instead to pay them every third week. “This particularly hurt All American’s cash flow as GMAC required sold vehicles to be paid off in three days,” the lawsuit claims. “By doing this, the defendants were able to make it appear as if their financial strength was solid at the expense of their dealers.”
Connectmidmissouri.com reports that local dealer Lloyd Belt is facing similar problems with GMAC, alledging that the finance firm told Belt he needed to sell cars faster, and pulled their cars and their financing when sales didn’t improve. Belt believes it is cheaper for GMAC, to stop financing dealerships and push them out of business than it is for GM to buy out the dealerships, a charge GMAC denies. Interestingly, Belt’s Chrysler vehicles were the first to be pulled from his lot. GMAC is partially owned by Cerberus, which also owns Chrysler. Coincidence? Probably not.
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