I dont know. Thats why I phrased it in a question. Cerberus owns 51% of GMAC. GM is offering 0% up to 60 months on extended cab and crew cab full size pickups. Is there a clause that states Cerberus has to go along with free financing when GM decides to move a product or does GM have to pay Cerberus for loss of revenue?

 

GM has to 'pay' for 0%, in effect, anyway. I mean it's money lost either way, so my guess is that they do have to pay the other shareholders of GMAC for the lost revenues, and probably from a financial standpoint they may even pay themselves (their own ownership in GMAC) just to keep the records straight.

 

Does he have to go along with 3.9% or 5.9%? I don't see how 0% should be any different. He doesn't run the company, he just owns 51% of it.

 

GM would have to negotiate with GMAC and pay them a fair value for the incentive.

It's actually always worked that way, even before GM sold out to Cerberus. That's why for years GMAC reported huge profits while GM-NAO lost money. I suspect that in the past there was a bit of shell game going on to inflate the incentive value paid to GMAC, and hence pad their profit (IMO). Now that half of GMAC is gone away, the values would have to be realistic.

 

I thought that GM still owned 51% of GMAC's car borrowing division?

 

Or more. I thought the part that Cerberus bought was primarily focused on the mortgage side, not the vehicle loans side...

 

Regardless of what GM owns - even when they owned it all, GM would still have to pay GMAC a negotiated rate for those incentives to keep their books straight. GM and GMAC are treated as financially separated companies by the books, so there are no charity cases or else magically GMAC starts looking like it's losing its *** and GM looks like it's doing better than it really is.

 

Nope, they have just 49%. Cerberus got the controlling interest, which in theory will help them get away from GM's junk bond borrowing status. When you have over $200 billion in debt, every point counts. GM has an option after so many years to repurchase a controlling instance. And yes this includes the car loan business. My memory is fuzzy but I think it was the commercial mortgage business that GM initially sold off before Cerberus bought interest in the rest of GMAC.