General Motors Corporation and Subsidiaries - Page 5




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          II. Independent GM Dealers' Relationship With GM and GMAC                    
               A.  General Background                                                  
               GM sells the motor vehicles it manufactures to the public               
          primarily through a network of independently owned dealerships               
          (i.e., independent GM dealers).  These independent GM dealers                
          purchase GM motor vehicles from GM for resale to individual                  
          customers, businesses, leasing companies, and other entities.                
          Some of these customers (e.g., businesses and leasing companies)             
          are "fleet customers".  Fleet customers purchase large volumes of            
          motor vehicles in a single transaction.                                      
               When a retail customer3 purchased a vehicle from an                     
          independent GM dealer, the retail customer could (1) pay cash for            
          the entire purchase price, (2) purchase the vehicle using third-             
          party financing, or (3) execute a retail installment sales                   
          contract (RISC) with the independent GM dealer under which the               
          retail customer agreed to pay for the vehicle over the term of               
          the contract at a stated interest rate.  Under the terms of the              
          RISC, the independent GM dealer could (1) hold the RISC for its              
          own account, (2) assign the RISC to a lender unrelated to GM or              
          GMAC, or (3) assign the RISC to GMAC.                                        
               If the independent GM dealer assigned the RISC to GMAC, GMAC            
          acquired the RISC at a price based on GMAC's "buy rate" (which               


               3  The term "retail customers" refers to all purchasers who             
          were not fleet customers.                                                    




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