Holden Retirees Club

General Motors Acceptance Corporation 

The General Motors Acceptance Corporation (GMAC) was founded in 1919 by General Motors in the USA to provide financing to automotive Dealers and later, retail customers.

It is now widely known that General Motors Export Division decided to establish vehicle assembly plants in all states of Australia in 1926, the first to open being at Marrickville in Sydney in November. Shortly afterwards, GM also decided to setup GMAC in Australian and New Zealand both as a means to assist the sale of its vehicles, and as a profit making opportunity.

The first notice to appear of this endeavour was on 7^th August, 1926 when press reports appeared to the effect that Mr. Glynn Davies (vice-president of General Motors Acceptance Corporation) who was in New Zealand engaged in the work of organising General Motors Acceptance Corporation for General Motors, New Zealand Ltd., would shortly undertake the organisation of a similar branch of the Corporation in Australia.

GMNZ had been established in January 1926, and its Petone Plant was the first Overseas Plant owned (not leased) by General Motors, hence the visit to New Zealand before GM Australia.

Little is recorded of the activities of Glynn Davies in Australia, although a press report on 23^rd September places him in Perth, “Mr. Glynn Davies visited the various Eastern States of Australia prior to his arrival in Western Australia, and en-route to U.S.A. will travel through India, Egypt, the Continent and England. While in Australia Mr Davies was engaged with matters affecting the establishment of the General Motors Acceptance Corporation of Australia, a subsidiary company to General Motors (Australia) Pty., Ltd. which deals with the financing of sales of General Motors' products.”

That Mr Davies was successful is shown by the registration of “General Motors Acceptance Corporation of Australia” in each state with head office in City Rd, Melbourne. The Sydney office, located at the Marrickville Plant, was registered in January 1927, as was the Perth office at the Perth Cottesloe Beach plant. Brisbane office followed in February, and the South Australian office was established at the Birkenhead Plant in July 1927.

In November 1927 articles appeared commenting that although it was normal for buyers in USA to pay for cars on Terms, in Australia people usually paid cash. GMAC set about changing that.

Mr. A. S. Pierce (U.S.A.) and Mr. J. D. Smart (Canada), representatives of the General Motors Acceptance Corporation, said in an interview in Perth “The procedure is simple and proven effective. When a dealer signs the franchise to sell General Motors cars, the Acceptance Corporation approaches him with a plan of finance. Its policy is to deal fairly with the dealer and at the same time maintain the Corporation as a business proposition. If the dealer is interested, special arrangements may be made to accommodate him, and it is interesting to note that 80 per cent of dealers avail themselves of the facilities thus offered.

When the dealer buys the car in the first place he is financed by the Corporation. When he sells it, the Corporation then conducts business with the hirer, the dealer still retaining an interest to assure that no bad financial risk is taken.”

There soon followed advertisements from Dealers offering to sell cars on “Easy Terms”. State Managers travelled their states visiting Dealers to sign them up.  Probably there was none more keen than Mr L. F. Davis, who came from the New York office to be the Brisbane based manager of GMAC in Queensland.

Faced with the prospect of long road distances and time spent as he travelled his customers, he chartered an Avro-Avian aeroplane from the Aircraft Proprietary Ltd., Brisbane, piloted by Mr. Ron Adair.

The trip was carefully timed out but as travel by aeroplane was in its infancy and many of the towns did not have any facilities for landing an aeroplane, the local Dealers were asked to help, and the local golf courses figured in the makeshift runway arrangements.

On 14^th September, the Cairns Post reported “The Queensland Manager of the Acceptance Corporation, Mr. F. L. Davis, contemplates visiting Cairns on or about the 18th instant, and has entrusted Mr. L. Fitzsimmons, General Motors Dealer, of Lake-street, with the task of selecting a suitable landing ground for the Avro-Avian aeroplane in which he is touring the principal Queensland centres.

After consultation with the City and Shire Authorities, and inspecting various salt pans, flats, etc., in and around Cairns, Mr. Fitzsimmons has accepted Mr. S; H. Warner's offer of the Golf Club's fairway as the most suitable landing ground.

Negotiations have been in progress for over a week past, and will be finalised at an early date, when particulars will be made public. Working in conjunction with Mr Warner and Mr. Hogan, Mr. Fitzsimmons hopes to be able to arrange for short pleasure trips for the public, the proceeds to be devoted to the Ambulance, and Golf Club.”

It was believed that this was the first trip of this nature made in Queensland, and a considerable amount of time would be saved, particularly in view of the long distances to be covered between Northern towns.

On Tuesday 11^th September 1928, Davies left by aeroplane on the business tour of North Queensland. He would visit General Motor’s Dealers in Gympie, Maryborough, Bundaberg, Rockhampton, Mackay, Bowen, Townsville, Cairns, paying particular attention to those using the corporation's financial plan. Returning, he would visit Townsville, Mackay, Clermont, and Rockhampton, thence to Brisbane.

But the trip was not without incident.

On September 12th, it was reported from Bundaberg “Mr. L. P. Davis arrived here yesterday in the Avro-Avian 'plane, piloted by Mr. Adair, making a beautiful landing in Hinkler Park. When they went to the shed in which their machine was housed this morning they discovered that the padlock on the door had been wrenched off and the door was open, but the machine had not been interfered with, although It caused them concern, and occasioned delay in their departure for the north, while the engine and machine were closely examined.”

On 13^th September, as arranged by the local Dealer, they landed at the Mackay Town Common, by consent of the City Council. A wide  strip of land was marked off, and a grader run over to smooth the surface to some extent. Wide calico strips were run along the boundary of the space set apart for the landing, a white vane was erected on a tall pole, and a smoky fire further assisted the visitors to locate the area set apart.

They arrived at Bowen on 14^th September, where they planned to spend a few days.  However, on arrival the machine made a bad landing owing to the high wind, and one wing and the propeller were damaged. The plane was repaired at Bowen and a new propeller was fitted, and the plane flew again on the morning of 18^th September “in perfect order”

Pilot Adair had then been flying passengers one at a time over the town during the morning, doing many stunts to the delight of the townspeople. However, an accident happened on the second trip after lunch.

The “Bowen Independent” reported “When at a height of about 1000 feet, the engine suddenly parted from the plane which spun round and alighted on its wheels, the slotted wings easing the force of the fall considerably. The passenger received a slight cut on the face and severe shock and the Pilot an injury to the hip and shock. The engine landed on the edge of a mangrove creek and buried about a foot into the mud, while the plane landed in the open, some 200 yards away. The blades of the propeller were smashed and were found a considerable distance from the engine, and appeared that they had snapped off before the engine parted company with the plane.” The plane was badly damaged. It was insured and no attempt was made to repair it.

Pilot Adair was demonstrating with a view to popularising travelling by air, thus paving the way for an airline up and down the coast, which he was interested in, and was to start at an early date.

Presumably, the trip was completed by car!

Not at all deterred, on 15^th December Mr Davis again set out with Ron Adair in a new Avro-Avian for another Dealer visit, this time to south–western Queensland. The itinerary covered stopping at the following towns: Chinchilla, Miles, Roma, Mitchell, Charleville, Cunnamulla, St. George, Goondiwlndi, Stanthorpe, and Warwick. There are no reports of any mishaps on this trip.

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On December 10, 1927, Mr H Mitchell arrived from the USA on the Aorangi to inspect the progress of GMAC in all States.  Mr Mitchell was responsible for Australia, New Zealand and South Africa.

But outside of these executive visits reported in the newspapers, not a lot is known about the leadership of GMAC during these years.  One exception is Mr Edward Walter Varvel who was the Sydney Branch Manager of GMAC, based at the Marrickville Plant.

Mr. Varvel, who served with the Imperial forces during the Great War from 1914 until he was invalided out in 1918, came to Australia from England in 1920, and joined Holden's Motor Body Builders, Adelaide, and was associated with the motor industry since that time. When General Motors Acceptance Corporation commenced operations in Australia in 1926, Mr. Varvel joined their original staff. During the following seven and a half years he held responsible positions for GMAC in South Australia and New South Wales.  

In 1929 Mr. Varvel went to America and Africa for his company, and was away from Australia over 12 months. Mr. Varvel was again in America in 1932.

He was in General Motors' head office in Melbourne when he resigned in January 1934 and bought a GM Dealership in Nowra NSW. He later joined Consolidated Acceptance Corporation.

In 1941 Varvel was General Manager of Consolidated Acceptance Corporation, and 1947 was Managing Director.

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GMAC was a hugely successful business in Australia, generating continuous profits throughout its life.  The profit levels moved up and down with market conditions, but never went into loss.  During most of this time, there were only two regular types of reports in the newspapers about GMAC”

- Appearing in Court to recover funds from delinquent users of its services, and

- Capital raising through regular issue of promissory notes, which were usually almost immediately oversubscribed as soon as issued.

In short, it was a regular “Cash Cow” for General Motors.

It was therefore somewhat a shock to the financial world when in 2008, it was announced that GMAC was withdrawing from Australia in December.

"We're going to cease retail and wholesale vehicle financing in Australia and New Zealand," GMAC USA spokeswoman Gina Proia said. She said GMAC had decided to abandon Australia because of funding woes brought on by the global credit crisis.

In the US, the struggling company has slashed new lending and demanded dealers start paying off the full amount of loans over floor stock.

GM, which trades in Australia as Holden, holds 49 per cent of GMAC after selling 51 per cent to a consortium led by private equity outfit Cerberus Capital in 2006”.

As a result of losses in subprime mortgage loans, the United States Treasury invested $17.2 billion in the company in 2008-2009. The Treasury sold its last stake in the company in 2014, recovering $19.6 billion from its $17.2 billion investment.

In May 2010, GMAC was taken over itself as Ally Financial, a bank holding company organized in Delaware and headquartered in Detroit, Michigan. The company provides financial services including car finance, online banking via a direct bank, corporate lending, vehicle insurance, mortgages, credit cards, and an electronic trading platform to trade financial assets.

However, in July 2010, General Motors entered into a definitive agreement to acquire AmeriCredit in an all-cash transaction valued at approximately $3.5 billion. The deal provided GM with a new financial arm to replace the loss of GMAC (now Ally Financial). Following the approval of the deal by AmeriCredit shareholders, GM renamed the company "GM Financial" on October 1, 2010.

On September 4, 2014, GM and GM Financial announced it entered into a support agreement providing for leverage limits and liquidity support to GM Financial if needed, as well as other general terms of support.

Since being acquired by GM in 2010, GM Financial has significantly increased its share of GM’s business which now represents 75 percent of GM Financial’s consumer loan and lease originations.

On 15th April, 2019, Holden announced that GM Financial, the global captive automotive finance company of General Motors, had officially launched its Australian business, called Holden Financial Services.

In addition to Australia, GM Financial’s global operations cover approximately 90 percent of GM’s worldwide automotive sales footprint.

 “Holden Guaranteed Value” was their first Holden product offering, giving customers the choice and flexibility to trade in, keep or return their vehicle at the end of their selected finance term, with the peace of mind around the future value of their vehicle.”

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