General Motors 2011 Annual Report Download - page 180

GENERAL MOTORS COMPANY AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Note 28. Transactions with Ally Financial
Automotive
The following tables summarize the financial statement effects of and maximum obligations under agreements with Ally Financial
(dollars in millions):
Successor
December 31,
2011
December 31,
2010
Residual support (a)
Liabilities(receivables)recorded ........................................................ $ (6) $ (24)
Maximumobligation .................................................................. $ 40 $ 523
Risk sharing (a)
Liabilitiesrecorded ................................................................... $ 66 $ 269
Maximumobligation .................................................................. $ 88 $ 692
Vehicle repurchase obligations (b)
Maximum obligations ................................................................. $19,779 $18,807
Fairvalueofguarantee ................................................................ $ 17 $ 21
(a) Represents liabilities (receivables) recorded and maximum obligations for agreements entered into prior to December 31, 2008.
Agreements entered into after December 31, 2008 have not included residual support or risk sharing programs. In the years ended
December 31, 2011 and 2010 favorable adjustments to our residual support and risk sharing liabilities of $0.5 billion and $0.6
billion were recorded in the U.S. due to increases in estimated residual values.
(b) The maximum potential amount of future payments required to be made to Ally Financial under this guarantee is based on the
repurchase value of total eligible vehicles financed by Ally Financial in dealer stock. If vehicles are required to be repurchased
under this arrangement, the total exposure would be reduced to the extent vehicles are able to be resold.
Successor Predecessor
Year Ended
December 31,
2011
Year Ended
December 31,
2010
July 10, 2009
Through
December 31, 2009
January 1, 2009
Through
July 9, 2009
U.S. marketing incentives and operating lease residual payments . . . $1,428 $1,111 $695 $601
Exclusivityfeeincome..................................... $ 76 $ 99 $ 47 $ 52
Marketing Incentives and Operating Lease Residuals
Under an interest rate support program, we pay an amount at the time of lease or retail contract origination to adjust the interest rate
in the retail contract or implicit in the lease below Ally Financial’s standard interest rate. The amount paid at contract origination
represents the present value of the difference between the customer’s contractual rate and Ally Financial’s standard rate for a given
program.
Under a residual support program, a customer’s contract residual value is adjusted above Ally Financial’s standard residual value.
We reimburse Ally Financial to the extent sales proceeds are less than the customer’s contract residual value, limited to Ally
Financial’s standard residual value. The residual support amount owed is calculated at contract termination and, in cases where the
amount differs from the expected amount paid at contract origination, the difference is paid to or paid by Ally Financial.
Under a risk-sharing arrangement, residual losses are shared equally with Ally Financial to the extent remarketing proceeds are
below Ally Financial’s standard residual value (limited to a floor).
Under a capitalized cost reduction program, we pay an amount at the time of lease or retail contract origination to reduce the
principal amount implicit in the lease or retail contract below the standard manufacturers’ suggested retail price.
178 General Motors Company 2011 Annual Report