GMAC Uses "NEW MATH"!

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rlee's picture
rlee
Status: Silver Member (Offline)
Joined: Sep 18 2008
Posts: 148
GMAC Uses "NEW MATH"!

Well folks, it seems that the cash thrown at General Motors wasn't enough, so its wholy owned 'bank' GMAC has jumped on the bank holding company bandwagon and scored itself some freebies as well.  What I'm interested in knowing is this:  How do you borrow money at a reported rate of 8% over the loan term, and then go on a national marketing rampage lending it out on new GM vehicles at 0%?  Isn't this the same stupid, backwards thinking, skewed math concept that put those bufoons in this mess in the first place?

I've been out of school for a while, but has basic math changed that much?  I didn't think you could pay to have money, give it away, and somehow make money doing it!

RubberRims's picture
RubberRims
Status: Silver Member (Offline)
Joined: Nov 22 2008
Posts: 145
Re: GMAC Uses "NEW MATH"!

Hi Bob

I have heard they will look to differ future profits. Besides the design industry has always recouped it's lossess via the manufacturing process. GM will use backward thinking to look at a short term solution, rather than a sustainable long term process. Do they have a choice, or keep manufacturing cheap undesirable cars. The additions or optional extras will support what people are really looking for in a car. Most probably the critique for them to up the margins. trouble is I no-longer play by these rules any more. I dread to thing what optimisation techniques GM are tinking to deploy after this financial fiasco. They have most definitely lost more than they know.   

RR

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