GMAC announced it would be dropping its minimum credit rating floor from 700 points to 620 points, which is about the national average. The previous 700-point floor was hurting dealers who couldn't find financing for many of their potential customers, according to Mark LaNeve, GM's vice president of sales and marketing.
"The actions of the federal government to support GMAC are having an immediate and meaningful effect on our ability to provide credit to automotive customers," said GMAC President Bill Muir. "We will continue to employ responsible credit standards, but will be able to relax the constraints we put in place a few months ago due to the credit crisis. We will immediately put our renewed access to capital to use to facilitate the purchase of cars and trucks in the U.S."
The new floors will open financing to a very large segment of the population, and taken in combination with GM's newly announced offers, could - in theory - translate into a burst of new sales. Chief among GM's incentives is a 0% loan option on the Chevrolet Trailblazer, Saab 9-7X and GMC Envoy, all of which are discontinued, reports Automotive News. Pushing such undesirables with 0% financing may still be tough, however, given the market's ongoing abandonment of SUVs. The Saab 9-3 and 9-5 sedans are also included in the offer, which only lasts through next Monday, January 5th. Other GM offers include stackable bonus cash and/or dealer cash ranging from $500 to $4,250 on many 2008 and 2009 vehicles.
The goal with the offers isn't so much about sheer volume - reaching large sales numbers in the current market is unrealistic. But maintaining or expanding market share is possible, especially with the re-energized ability to approach middle-level consumers with attractive deals.
"Six hundred twenty is not a subprime score," said LaNeve. "That's a very creditworthy buyer. Hopefully, we'll have access to more of the market that is out there."
"Anytime you can make credit available to a wider spread of buyers, that's a good thing. Not everyone has perfect credit. It brings a lot more customers into play for us."