GM sees boost from GMAC bailout, easier credit

DETROIT (Reuters) - General Motors Corp GM.N expects to see a boost to sales as low-cost loans made possible by the federal bailout of finance company GMAC LLC reach showrooms, the automaker's sales chief said on Tuesday.

"The bottom line is much better access to funding," GM vice president for North American sales Mark LaNeve said on a conference call with reporters.

GMAC, which has traditionally provided the bulk of financing for GM car buyers and dealers, received a $6 billion infusion from the U.S. government late Monday night as part of the Troubled Asset Relief Program.

The finance company has also been cleared to operate as a bank holding company after a restructuring that will reduce GM's ownership stake to less than 10 percent from its current 49 percent.

Although those changes will make GM the first major automaker to operate without the support of a captive finance company, LaNeve said the more immediate impact would come as a better-capitalized GMAC relaxes credit for consumers.

GMAC said on Tuesday that it would begin offering financing to consumers with credit scores of 621 or higher, an easier standard than the 700-score limit it had imposed in October as credit tightened.

GM's LaNeve said the easier lending standard would allow GMAC to finance vehicles for about 75 percent to 80 percent of new car shoppers, up from just 40 percent under the tighter standard it had applied for the past two months.

LaNeve said GM was also considering a return to auto leasing, a form of financing credited with supporting sales across the industry from 2000 until about 2006.

"Hopefully we can return to leasing, but at a much lower risk," LaNeve said. "It's something that we are looking at."

SALES UP

LaNeve said GM's sales for December had been up "considerably" from depressed November levels even before the reduced-rate financing offers announced on Tuesday.

Those include zero-percent financing on a handful of slower-selling models and reduced interest rates on loans for most of GM's line-up in addition to existing cash discount offers. The lower-cost financing through GMAC is available through January 5.

"It improves our overall competitiveness," LaNeve said, adding that he expected GM to extend similar incentives for the full month of January.

LaNeve said GM had seen sales of entry-level sedans like the Chevrolet Cobalt under pressure in December because buyers in that segment had been hit hardest by tighter credit.

Sales of GM's midsize sedans such as the Chevy Malibu, newer crossovers like the Chevy Traverse and full-size SUVs had been stronger, he said.

GMAC had been unable to provide low-cost financing because of pressure on its own funding since late summer.

That forced GM to scramble by promoting tie-ups with local banks and credit unions as GMAC pulled back from the market.

GM's competitors, including Toyota Motor Corp (7203.T) and Nissan Motor Co (7201.T), have been aggressive with their own zero percent financing offers in the interim.

Both GMAC and Chrysler LLC's finance unit were forced to end leasing programs earlier this year after booking deep losses related to the sharp decline in resale values for SUVs.

GMAC and Chrysler are both controlled by private equity firm Cerberus Capital Management CBS.UL.

(Reporting by Kevin Krolicki; Editing by Maureen Bavdek and Brian Moss)