GMAC Inc.'s re-entry into vehicle leasing marks a momentous about-face for the lender, which was forced to exit the leasing market last year amid a paucity of capital and losses on its auto lease book.

But for the time being, GMAC, which is coping with still hefty losses from its struggling mortgage business, is unlikely to return to its traditional levels of lease financing. Leasing "is going to be used selectively and where it makes sense," said Gina Proia, a GMAC spokeswoman.

Historically, General Motors Co. and GMAC, the automaker's former financing arm, were able to team up to offer cheap leases. GM would use marketing dollars, earmarked as vehicle incentives, to subsidize the cost of a vehicle lease that GMAC would originate and fund.

GMAC is now a lending affiliate of GM after it converted into a bank holding company in December in efforts to garner federal funds. As part of GMAC's transformation, GM significantly scaled back its 49% ownership of the lender.

Propped up by federal funds, GMAC said Monday it kicked off over the weekend lease financing on a number of 2009 and 2010 GM models in 45 states. It will also consider expanding the program to other vehicles.

GMAC, strapped for capital and amid a steady decline in vehicle resale values, pulled out of leasing in August 2008.

After running into serious liquidity problems in late 2008, both GM and GMAC have been propped up by more than $60 billion in government funds. As of June 30, GMAC had received $12.5 billion of federal funds, including $5 billion in December under the Treasury's Troubled Asset Relief Program, and $7.5 billion in the second quarter. In addition, in the second quarter, GMAC sold $4.5 billion in government-backed bonds under a federal program aimed at allowing companies to cheaply refinance debt coming due.

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