General Motors Acceptance Corporation (GMAC)
Written by Bill Bowman
In the early days of the motor vehicle industry, dealers paid cash to stock their inventory, purchasing just a few vehicles at a time. With the onset of the assembly line, manufacturers wanted dealers to buy vehicles in large quantities, in order to keep factories running regularly. GMAC was formed in 1919 and provided GM dealers with the financing they needed to maintain their vehicle inventories, as well as give the dealer's retail customers the ability to purchase new vehicles easily and conveniently. The evolution of GMAC:
- 1919: The first branch was opened in New York City and was capitalized at $2,500,000. Later that year, branches opened in Detroit, Chicago, San Francisco, and Toronto.
- 1920: A branch opened in Great Britain.
- 1928: The four millionth retail contract was signed.
- 1958: GMAC financed its 40 millionth vehicle and its first ever annual earnings of $1 billion were achieved. GMAC also entered the mortgage business at this time.
- 1999: The highest earnings to date were recorded followed by the purchased of The Bank of New York’s lending unit leading to the creation of the Commercial Finance Group.
- 2000: $1.6 billion earnings set another new record. Global growth took place in all sectors of the organization. North American Operations launched SmartAution, an Internet based remarketing channel for GMAC off-lease vehicles.
- 2001: Produced another $1.8 billion record setting earnings year. Since its inception, GMAC has provided more than $1 trillion of financing for 150 million cars and trucks around the world.
- 2002: Another record breaking year with nearly $1.9 billion earnings reported. GMAC now has a presence in 41 markets.
- 2003: Earnings soared to nearly $2.8 billion, another new record. SmartAuction emerged as a top Internet remarketing tool with cumulative sales to exceed $1 million in 2004.
- 2004: Net income of $2.9 billion marked yet another year of record earnings and the tenth straight year of increased profits. International Operations made a historical entrance into China, sales of insurance to GM customers increased eightfold, and GMAC Automotive Bank opened its doors.
- 2005: General Motors Corporation, facing even greater losses, told investors it was seriously considering selling a majority stake in GMAC, its giant and profitable financial unit.
- 2006: A group of investors, led by Cerberus Capital Management, bought 51% of GMAC from General Motors, which retained a 49% stake.