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proposals for rate support programs involved GMAC's bearing a
cost of such programs, and GMAC refused to bear such costs.
GMAC's position was that its margins did not allow it to absorb
these costs. GMAC considered these costs a cost of selling
automobiles that should be borne by GM. GM eventually decided to
pay these costs.
The first retail rate support program, initiated in July
1981, included all U.S. car divisions. The initial retail rate
support proposal was quite successful. It was more effective
than GM executives hoped, and sales increased more than GM
expected.
In 1981, when GM first announced retail rate support
programs, GMAC immediately contacted its lenders and credit
rating agencies to inform them that (1) GMAC's margins were not
going to be adversely affected by such programs, (2) GM, and not
GMAC, was bearing the costs of such programs, and (3) GMAC was
earning its normal rate of return on RISC's entered into by
retail customers under a retail rate support program (rate-
supported RISC).
2. Nuts and Bolts of a Retail Rate Support Program
Retail rate support programs involved GM's central
management, GM's car divisions, independent GM dealers, and GMAC.
The purpose of the retail rate support programs was to spur the
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