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UNITED STATES

FORM 10-K

[X]	ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003, or
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from              to             .

Commission file number: 1-3754

GENERAL MOTORS ACCEPTANCE CORPORATION

200 Renaissance Center

(313) 556-5000

Securities registered pursuant to Section 12(b) of the Act:

Each class of security listed above is registered on the New York Stock Exchange.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X]

As of December 31, 2003, there were outstanding 10 shares of the issuer’s $.10 par value common stock.

Documents incorporated by reference. None.

Reduced Disclosure Format

The registrant meets the conditions set forth in General Instruction I(1)(a) and (b) of Form 10-K and is therefore filing this Form with the reduced disclosure format.

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* Item is omitted pursuant to the Reduced Disclosure Format, as set forth on the cover page of this filing.

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Item 1. Business

GMAC’s global activities include Financing, Mortgage and Insurance operations:

•	Financing — GMAC and its affiliated companies offer a wide variety of automotive financial services to and through General Motors and other automobile dealerships and to the customers of those dealerships. The Company also provides commercial financing and factoring services to businesses in other industries (e.g., manufacturing and apparel).
•	Mortgage — The Company’s Mortgage operations originate, purchase, service and securitize residential and commercial mortgage loans and mortgage related products.
•	Insurance — GMAC’s Insurance operations insure and reinsure automobile service contracts, personal automobile insurance coverages (ranging from preferred to non-standard risk) and selected commercial insurance coverages.

Various subsidiaries of the Company are subject to regulatory, financial and other requirements of the jurisdictions in which they conduct business operations. These regulatory restrictions primarily dictate that these subsidiaries meet certain minimum capital requirements, restrict dividend distributions and may restrict certain assets. To date, compliance with these various regulations has not had a material effect on the Company’s consolidated financial condition, results of operations or cash flows.

The Company had 32,205 and 31,936 employees worldwide as of December 31, 2003 and 2002, respectively. A description of the Company’s business segments, along with the products and services offered and the market competition, is contained in the individual business segment Operations sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations, which begins on page 9.

Item 2. Properties

Item 3. Legal Proceedings

GMAC and its subsidiaries are named as defendants in a number of legal actions and from time to time involved in governmental proceedings arising in connection with GMAC’s respective businesses. Some of the pending actions purport to be class actions. The Company establishes reserves for legal claims when payments associated with the claims become probable and the costs can be reasonably estimated. The actual costs of resolving legal claims may be substantially higher or lower than the amounts reserved for those claims. Based on information currently available, advice of counsel, available insurance coverage and established reserves, it is the opinion of management that the eventual outcome of the actions against GMAC will not have a material adverse effect on the Company’s consolidated financial condition, results of operations or cash flows. However, in the event of unexpected future developments, it is possible that the ultimate resolution of legal matters, if unfavorable, may be material to the Company’s consolidated financial condition, results of operations or cash flows.

Item 5. Market for Registrant’s Common Equity and Related Stockholder Matters

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

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Item 8. Financial Statements and Supplementary Data

GMAC’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K are available on the Company’s Internet website, free of charge, as soon as reasonably practicable after the reports are electronically filed with or furnished to the United States Securities and Exchange Commission. These reports are available at www.gmacfs.com, under Investment, Financial Statements and SEC Filings.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 14. Principal Accountant Fees and Services

The aggregate fees billed to the Company for professional services performed by Deloitte & Touche were as follows:

In addition to the fees for services included in the table above, the Company was allocated fees of $272 thousand from its parent, GM. These amounts pertain to services such as the preparation of tax returns for personnel on international assignment and assistance to the internal audit staff, prior to the termination of such services. These services were contracted at the discretion of and paid by GM.

The services performed by Deloitte & Touche in 2003 were pre-approved in accordance with the pre-approval policy and procedures adopted by the GM Audit Committee at its August 5, 2002 meeting, and as subsequently revised. This policy requires that during its first meeting of the fiscal year, the GM Audit Committee will be presented, for approval, a description of the Audit-Related, Tax and Other services expected to be performed by the principal accountant during the fiscal year. Any requests for such services in excess of $1 million not contemplated during the first meeting must be submitted to the GM Audit Committee for specific pre-approval. Requests for services less than $1 million must be pre-approved by the Chairman of the GM Audit Committee, and reported to the full Committee at its next regularly scheduled meeting. Proposed fees for Audit services are presented to the GM Audit Committee for approval in May each year.

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The GM Audit Committee determined that all services provided by Deloitte & Touche during 2003 were compatible with maintaining their independence as principal accountants.

Item 15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

The Company filed the following Current Reports on Form 8-K during the quarter ended December 31, 2003:

•	On October 15, 2003, under Item 12, Results of Operations and Financial Condition, summarizing financial results for the quarter ended September 30, 2003.
•	On December 3, 2003, under Item 5, Other Events, summarizing the decision to retain GMAC’s commercial mortgage business.

No other reports on Form 8-K were filed during the quarter ended December 31, 2003; however,

•	On January 20, 2004, under Item 12, Results of Operations and Financial Condition, the Company filed a Current Report on Form 8-K summarizing financial results for the year and quarter ended December 31, 2003.
•	On February 11, 2004, under Item 5, Other Events, the Company filed a Current Report on Form 8-K announcing certain executive appointments.

Pursuant to General Instruction B of Form 8-K, reports submitted under Item 12 are not deemed to be “filed” for the purpose of Section 18 of the Securities and Exchange Act of 1934 and are not subject to the liabilities of that section. GMAC is not incorporating, and will not incorporate by reference, these reports into a filing under the Securities Act or the Exchange Act.

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	General Motors Acceptance Corporation
	(Registrant)
	/s/ ERIC A. FELDSTEIN
	________________________________________ Eric A. Feldstein
	Principal Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated, this 9th day of March, 2004.

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GMAC is a leading global financial services firm with over $288 billion of assets and operations in 41 countries. Founded in 1919 as a wholly-owned subsidiary of General Motors Corporation, GMAC was established to provide GM dealers with the automotive financing necessary for the dealers to acquire and maintain vehicle inventories and to provide retail customers the means by which to finance vehicle purchases through GM dealers. GMAC products and services have expanded beyond automotive financing and GMAC currently operates in three primary business segments — Financing, Mortgage and Insurance operations. Refer to the separate business segment operations discussions in this MD&A for a description of the operating segments activities and results of operations.

Operating Summary

GMAC earned consolidated net income of $2,793 million in 2003, up nearly 50% from the $1,870 million earned in 2002. These earnings are a record for GMAC, with 2003 representing the ninth consecutive year of annual income growth. The record results were in large part due to a significant increase in earnings at the Company’s Mortgage operations, together with increases in net income in GMAC’s other business segments.

In 2003, net income from Financing operations totaled $1,360 million, up $121 million from the $1,239 million earned in the prior year. Earnings improved as lower credit loss provisions (primarily in the commercial loan portfolio) and increased revenues from higher asset levels offset the unfavorable impact of narrower net interest margins.

GMAC Mortgage Group, Inc. earned a record $1,254 million in 2003, more than double the $544 million earned in 2002. Earnings improved significantly at all three mortgage companies, as operating results benefited from the low interest rate environment in 2003. The interest rate environment led to increased production and securitization volume, higher pricing margins for residential mortgages, increased gains from the sale and securitization of loans, and increased financing income from mortgage loans held for investment.

GMAC Insurance Holdings, Inc. generated net income of $179 million in 2003, up $92 million from the $87 million earned in 2002. This increase reflects both higher premiums and underwriting volume, combined with an increase in investment income resulting from reduced levels of impairment in 2003, as compared to 2002, related to the Insurance Group’s investment portfolio.

As summarized in the Supplementary Financial Data appearing on page 83, GMAC’s quarterly earnings of $630 million were a fourth quarter record and a 20% increase from the $524 million earned in the final quarter of 2002. For the quarter, net income from Financing operations totaled $342 million, up from $334 million earned in the fourth quarter of 2002. GMAC Insurance Holdings, Inc. had net income of $73 million in the fourth quarter of 2003, up from the $5 million earned in the same period the prior year. GMAC Mortgage Group, Inc. earned $215 million in the fourth quarter, up over 16% from the $185 million earned in the fourth quarter of 2002.

Outlook

•	Funding and liquidity — GMAC’s ability to adequately fund the business at attractive rates is a key component of the Company’s future profitability. During 2002 and the first half of 2003, the Company experienced a series of negative credit rating actions resulting in the downgrade of GMAC’s credit ratings to historical low levels. Similarly, during this time GMAC’s unsecured borrowing spreads significantly widened. However, through the use of a funding strategy focused on diversified sources of liquidity, the Company has been able to successfully fund the growth in assets over the past two years. Although GMAC’s unsecured debt ratings have remained unchanged, the Company recently (beginning in the third quarter of 2003) has experienced tightening in unsecured credit spreads and expects, given current market conditions, to have sufficient access to the capital markets to meet future funding demands. In the event of deterioration in the funding environment, management will adjust the funding and business strategy as necessary to meet GMAC’s liquidity requirements although the funding may be at higher rates than the Company currently experiences.
•	Consumer credit risk — GMAC is exposed to credit risk on the portfolio of consumer automotive finance receivables and residential mortgage loans held for investment, as well as on the interests retained from the Company’s securitization activities of these asset classes. Credit losses in GMAC’s consumer portfolio are influenced by general business and economic

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GMAC offers financing, mortgage and insurance products and services to customers throughout the world.

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GMAC’s Financing operations offer a wide range of financial services and products (directly and indirectly) to retail automotive consumers, automotive dealerships, and other commercial businesses. These products and services include the purchase of installment sales contracts and leases, extension of term loans, floorplan financing and other lines of credit, and factoring of receivables.

Consumer Automotive Financing

The following table summarizes GMAC’s new vehicle consumer financing volume and the Company’s share of GM retail sales.

General Motors may elect to sponsor incentive programs (on both retail contracts and leases) by supporting financing rates below standard rates at which GMAC purchases retail contracts. Such purchase incentives are also referred to as rate support or subvention. General Motors pays the present value difference between the customer rate and GMAC’s standard rates either directly or indirectly to GM dealers. GMAC purchases these contracts at a discount, which is deferred and recognized as a yield adjustment over the life of the contract. GM may also provide incentives on leases by supporting residual values (established at lease inception) in excess of GMAC’s standard residual values and by reimbursing the Company to the extent vehicle remarketing proceeds are less than contract residual. Such lease incentives are also referred to as residual support, as further discussed in the Residual Risk Management portion of the Financing Operations section of this MD&A. The following table summarizes the percentage of the Company’s annual retail contract and lease volume that includes GM sponsored incentives.

GM’s decisions to use rate and residual incentives for marketing purposes on consumer retail contracts and leases can have a significant effect on the business of the Company. For example, in the mid-1990s, GM’s marketing efforts consisted primarily of rate and residual incentives on consumer leases. As a result, the Company’s lease portfolio increased from $11 billion in 1993 to $30 billion at the end of 1999. Over the past few years, GM has used rate subvention on retail contracts to market vehicles in the United States. In particular, GM began to aggressively use special rate financing incentives in the fourth quarter of 2001, in response to the economic conditions caused by the September 11 tragedy (through the “Keep America Rolling” program) and has continued to use similar incentives as a marketing strategy. As a result of the retail financing incentives, GMAC’s consumer automotive retail contract portfolio has increased by 64% since September 2001. GMAC’s 2003 financing volume and penetration share decreased from the levels experienced in 2001 and 2002, but continues to reflect traditionally high levels, as a result of GM’s continued use of financing incentives. The decreases as compared to the previous years are indicative of the large initial impact in 2001 and 2002 from GM’s “Keep America Rolling” special rate financing campaign and the fact that the impact of incentive programs on consumers diminishes the longer they are in place. Leasing volume continued to decline in 2003 as GM continued to

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Consumer Credit Approval

•	The consumer’s credit history, including any prior experience with GMAC,
•	The asset value of the vehicle and the amount of equity (downpayment) in the vehicle, and
•	The term of the retail contract or lease.

GMAC uses a proprietary credit scoring system to support this credit approval process and to manage the credit quality of the portfolio. Credit scoring is used to differentiate credit applicants in terms of expected default rates. This enables the Company to properly evaluate credit applications for approval and to tailor the pricing and financing structure based on this assessment of credit risk. The Company’s credit scoring models are periodically reviewed and updated based on historical information and current trends. However, these actions by management do not eliminate credit risk. Improper evaluations of contracts for purchase and changes in the borrower financial condition subsequent to approval could negatively affect the quality of the Company’s receivables portfolio, resulting in credit losses.

As a part of the contract purchase process, the Company verifies that physical damage insurance is placed on the vehicle, and a security interest is established in the vehicle (for retail contracts).

Servicing

GMAC customers have the option to remit payments based on monthly billing statements, coupon books, or electronic funds transfers. Customer payments are processed by regional processing centers that electronically transfer payment data to customer’s accounts. GMAC also utilizes regional customer service centers to process customer requests for changes of address, payoff quotes, copies of contracts and other requests.

Collection activity on a retail contract is initiated when a customer becomes 10 days past due. Accounts 10 days past due receive a late notice. When an account is more than 15 days but less than 40 days past due, a third-party collection service attempts to contact the customer and make payment arrangements. Once an account becomes 40 days past due, specialized collection centers within GMAC begin collection follow-up, with the objective of tracking the account more closely and making appropriate decisions regarding repossession of the vehicle.

During the collection process, GMAC may offer a payment deferral to a customer experiencing temporary financial difficulty. This deferral allows the customer to move the delinquent payment to the end of the contract term. GMAC collects a fee for the deferral calculated in accordance with state regulations. In certain situations, GMAC may offer to renew the remaining obligation, extending the term and thereby lowering the monthly payment obligation. Before offering a deferral or renewal, collection personnel determine the capacity of the customer to meet the revised payment terms and insure that the revision is in the best interest of both the customer and the Company.

Based upon legal and state regulations, GMAC will normally begin repossession activity once an account becomes 90 days past due. Repossession may occur earlier than 90 days past due if management determines that the vehicle is in danger of being damaged, hidden or the customer voluntarily surrenders the vehicle. Repossessions are handled by approved third-party repossession firms. The customer is given a period of time to redeem the vehicle by bringing the account current. If the vehicle is not redeemed, it is sold at auction and proceeds of the sale are credited to the balance outstanding. If the proceeds are not sufficient to cover the outstanding principal balance and any accrued interest, the resulting deficiency is charged-off. Regional asset recovery centers pursue collections on accounts that have already been repossessed and on “skip” accounts when the vehicle cannot be located.

Consumer Credit Risk

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The following table summarizes pertinent delinquency and loss experience (as defined by accounts charged-off) in the consumer automotive retail contract portfolio. Consistent with the presentation in the Consolidated Balance Sheet, retail contracts presented in the table represent the principal balance of the finance receivable discounted for any unearned rate support received from General Motors.

In addition to the above loss and delinquency data, the following summarizes bankruptcy and repossession information for the United States retail contract portfolio:

The Company’s allowance for credit losses is intended to cover management’s estimate of incurred losses in the portfolio (refer to the Critical Accounting Estimates section of this MD&A and Note 1 to the Consolidated Financial Statements for further discussion). The following table summarizes the applicable allowance for credit losses as a percentage of total on-balance sheet consumer automotive retail contracts.

The Company’s consumer automotive leases are operating leases and exhibit different loss performance as compared to consumer automotive retail contracts. Credit losses on the operating lease portfolio are not as significant as losses on retail contracts because lease losses are limited to past due payments, late charges, and fees for excess mileage and excessive wear and tear. Since some of these fees are not assessed until the vehicle is returned, credit losses on the lease portfolio are correlated with lease termination volume. As further described in the Critical Accounting Estimates section of this MD&A, credit risk is considered within the overall depreciation rate and the resulting net carrying value of the operating lease asset. North American operating lease accounts past due over 30 days represented 1.69% and 1.95% of the total portfolio at December 31, 2003 and 2002, respectively.

GMAC’s losses on consumer automotive retail contracts and leases have increased over the past few years despite relatively stable delinquencies and loss frequencies during the same period. The increased losses arise from an increase in loss severity attributable to weaknesses in used vehicle prices (which is further described in the following Lease Residual Risk section). Weaker used vehicle prices increase the loss per occurrence as the Company realizes less upon repossession and disposal of the underlying vehicle. This increase in severity is illustrated by an increase in the average loss incurred per contract on repossessed vehicles in the United States, from $6,877 in 2001 to $8,205 in 2003, as calculated on only those new vehicle retail contracts with a loss. The overall credit quality of the consumer automotive portfolios has remained strong, primarily due to the higher quality of contracts purchased over the past few years because of management’s decision to tighten the contract purchase policy in the late 1990s. In addition, the increased volume of GM rate supported contracts has further enhanced portfolio credit quality. Typically, rate subvented contracts have stronger credit characteristics than non-incentivized contracts, as the former involve buyers who are more likely to have paid cash for the vehicles, in the absence of the attractive financing rates. A recent trend in the U.S. portfolio that could impact future credit performance is the increased volume of retail contracts with contractual terms in the

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Lease Residual Risk

In a consumer lease, the Company assumes ownership of the vehicle from the dealers. Neither the consumer nor the dealer is responsible for the value of the vehicle at the time of lease maturity. Typically, the vehicle is returned to GMAC for remarketing. The following summarizes GMAC’s methods of vehicle sale in the United States at lease termination, stated as a percentage of total lease vehicle disposals.

The Company primarily utilizes physical auctions and Internet auctions in disposing of vehicles.

•	Physical auctions — GMAC disposes of the majority of its off-lease vehicles, not purchased at termination, through official General Motors sponsored auctions. The Company is responsible for handling decisions at the auction, including arranging for inspections, authorizing repairs and reconditioning and determining whether bids received at auction should be accepted.
•	Internet auctions — In 2000, the Company began offering off-lease vehicles to GM dealers and affiliates through a proprietary Internet site. The Internet sales program was established to increase the net sales proceeds on off-lease vehicles by reducing the time between vehicle return and ultimate disposition (reducing holding costs) and broadening the number of prospective buyers (maximizing proceeds). GMAC maintains the Internet auction site, sets the pricing floors on vehicles, and administers the auction process. The Company earns a service fee for every sale. The Internet sales program has increased significantly since inception and was the remarketing channel for approximately 45% of 2003 off-lease vehicles disposed through auction in the United States (as compared to 40% in 2002 and 35% in 2001).

GMAC bears the risk of loss to the extent that the value of the vehicle upon remarketing is below the residual value estimated at contract inception. GMAC primarily uses published residual guidebook values in establishing standard residual values at contract inception. These projected values may be upwardly adjusted as a marketing incentive if General Motors considers an above-market residual appropriate to encourage consumers to lease vehicles. Such residual support by GM results in a lower monthly lease payment by the consumer. General Motors reimburses GMAC for its portion of these increased residual values, to the extent remarketing sales proceeds are less than the contract residual at termination. In addition to the residual support arrangement, GM shares in residual risk on all off-lease vehicles sold at auction. GMAC and GM share a portion of the loss when resale proceeds fall below the standard residual values on vehicles sold at auction. GM reimburses GMAC for a portion of the difference between proceeds and the standard residual value (limited to a floor).

Lease Residual Risk Management

•	Used vehicle market — The Company is at risk due to changes in used vehicle prices. General economic conditions, off-lease vehicle supply, and new vehicle market prices (of both GM and other manufacturers) most heavily influence used vehicle prices.
•	Initial residual value projections — As previously discussed, the Company establishes residual values at lease inception by consulting independently published guides. These values are projections of expected values in the future (typically between two to four years) based on current assumptions for the respective make and model. Actual realized values will likely differ.
•	GMAC’s remarketing abilities — GMAC’s ability to efficiently process and effectively market off-lease vehicles impacts the disposal costs and the proceeds realized from vehicle sales.
•	General Motors vehicle and marketing programs — GM influences lease residual results in the following ways:

	>	GM provides support to GMAC for certain residual deficiencies.
	>	The brand image and consumer preference of GM products impact residual risk, as the Company’s lease portfolio consists primarily of GM vehicles.

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	>	GM marketing programs that may influence the used vehicle market for GM vehicles, through programs such as incentives on new vehicles, programs designed to encourage lessees to terminate their leases early in conjunction with the acquisition of a new GM vehicle, (referred to as “pull-ahead” programs), and special rate used vehicle programs.

The following table summarizes the volume of lease terminations and resulting income impact in the United States (which represents approximately 70% of the Company’s operating lease portfolio) for the years indicated.

GMAC’s off-lease vehicle results have deteriorated as a result of lower than expected vehicle values at lease termination. As previously discussed, this is largely attributable to weak used vehicle prices due to excess supply of off-lease vehicles, and intense price pressure in the new vehicle market. Additionally, in 2003 the remarketing performance was negatively impacted by the timing of vehicles coming off-lease as a result of GM sponsored pull-ahead programs. Under the pull-ahead programs, customers are incentivized to return their vehicle prior to the scheduled termination of the lease, and to purchase (or lease) a new GM vehicle. As many of these vehicles were returned during a time of seasonally weak demand, remarketing results were adversely affected. The deteriorating remarketing results have been mitigated by GMAC’s aggressive use of the Internet in disposing of off-lease vehicles. This initiative has improved efficiency, reduced costs, and ultimately increased the net proceeds on the sale of off-lease vehicles. In 2004, the volume of lease terminations is expected to decrease significantly from the prior years which should help improve the average remarketing results on off-lease vehicles.

Commercial Financing

Automotive Wholesale Dealer Financing

The following table summarizes GMAC’s wholesale financing of new vehicles and the Company’s share of GM sales to dealers.

While GMAC’s financing volume decreased slightly in 2003 (due to a reduction in GM deliveries), it remained at historically high levels. GMAC’s share of financing of GM vehicle sales to dealers increased in 2003 and continued to be the primary funding source for GM dealer inventories.

Credit Approval

•	Reviews credit reports, financial statements, and may obtain bank references,
•	Evaluates the dealer’s marketing capabilities,

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•	Evaluates the dealer’s financial condition, and
•	Assesses the dealer’s operations and management.

Based on this analysis, the Company may approve the issuance of a credit line and determine the appropriate size. The credit lines represent guidelines, not limits, which dealers may exceed on occasion, an example being a dealer exceeding sales targets contemplated in the credit approval process. Generally, the size of the credit line is intended to be an amount sufficient to finance a 60-90 day supply of new vehicles and a 30-60 day supply of used vehicles.

Servicing and Monitoring

A statement setting forth billing and account information is prepared by GMAC and distributed on a monthly basis to each dealer. Interest and other non-principal charges are billed in arrears and are required to be paid immediately upon receipt of the monthly billing statement. Dealers remit payments directly to a GMAC office, typically within geographic proximity to the dealer.

Dealers are assigned a credit category based on various factors, including capital sufficiency, financial outlook, and credit history. The credit category impacts the amount of the line of credit, the determination of further advances, and the management of the account. GMAC monitors the level of borrowing under each dealer’s account daily. When a dealer’s balance exceeds the credit line, GMAC may temporarily suspend the granting of additional credit or increase the dealer’s credit line, following evaluation and analysis of the dealer’s financial condition and the cause of the excess.

GMAC personnel periodically inspect and verify the existence of dealer vehicle inventories. The timing of the verifications varies and no advance notice is given to the dealer. Among other things, verifications are intended to determine dealer compliance with the financing agreement and confirm the status of GMAC’s collateral.

Other Commercial Financing

•	Automotive dealer term loans — The Company makes loans to dealers to finance other aspects of the dealership business. These loans are typically secured by real estate, other dealership assets and occasionally the personal guarantees of the individual owner of the dealership.
•	Automotive fleet financing — Dealers, their affiliates and other companies may obtain financing to buy vehicles, which they lease or rent to others. These transactions represent GMAC’s fleet financing activities. GMAC generally has a security interest in these vehicles and in the rental payments. However, competitive factors may occasionally limit the security interest in this collateral. As of January 1, 2002, General Motors terminated programs in which GM provided a limited payment guarantee to GMAC and other lenders as consideration for providing fleet financing. Volume acquired prior to 2002 continues to be covered under the payment guarantee. At December 31, 2003, approximately 7 percent of GMAC’s fleet financing receivables were covered by the General Motors payment guarantee program.
•	Full service leasing — GMAC offers full service individual and fleet leasing products in Europe, Mexico and Australia. In addition to financing the vehicles, the Company offers maintenance, fleet, and accident management services, as well as fuel programs, short-term vehicle rental, title and licensing services.
•	Specialty lending — Through its Commercial Finance Group, the Company provides asset-based lending, equipment finance, structured finance and factoring services in the United States, United Kingdom and Canada to companies in the apparel, textile, automotive supplier and other industries.

Commercial Credit Risk

Credit risk is managed and guided by policies and procedures that are designed to ensure that risks are accurately assessed, properly approved and continuously monitored. Individual business units approve significant transactions and are responsible for credit risk

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The table below summarizes pertinent credit quality information for the commercial portfolio.

The Company’s allowance for credit losses is intended to cover management’s estimate of incurred losses in the portfolio (refer to the Critical Accounting Estimates section of this MD&A and Note 1 to the Consolidated Financial Statements for further discussion). The following table summarizes the applicable allowance for credit losses as a percentage of on-balance sheet commercial loans.

Consistent with the prior year, the majority of GMAC’s commercial credit losses were concentrated in the specialty lending portfolio at the Company’s Commercial Finance Group (included in commercial financing in the preceding table). The increase in the other commercial financing charge-offs in 2003 related to certain loans that were provided for in 2002 but were determined to be uncollectible and charged-off in 2003. Net losses on the wholesale portfolio in 2003 remained at traditionally low levels (2002 results include a $20 million recovery of a wholesale loss that was charged off in a prior year). The higher amount of impaired loans outstanding at December 31, 2003 was mainly caused by higher dealer inventories, and is not necessarily indicative of deterioration in the underlying credit quality of the portfolio.

Securitization Activities

Results of Operations

The following table summarizes the operating results of the Company’s Financing operations for the periods indicated. The amounts presented are before the elimination of balances and transactions with the Company’s other operating segments.

GMAC’s Financing operations benefited from a combination of higher asset levels and lower credit loss provisions in 2003, resulting in a 10% increase in net income as compared to 2002. While consumer vehicle financing volume decreased from the historically high levels of 2002, Financing operations experienced asset growth in the consumer portfolio as GM continued to use special rate financing programs as marketing incentives. However, lower net interest margins mitigated the increase in net income

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Total financing revenue increased only 1% as compared to 2002, as revenue increases from the growth in consumer receivables and loans was partially negated by lower market interest rates (and corresponding earning rates). Due to the floating rate nature of the portfolio, commercial revenue is particularly sensitive to changes in market rates, which largely accounted for the 11% reduction in commercial revenue. In addition to the decline in earning rates, leasing revenue was also negatively impacted by deterioration in the remarketing performance of off-lease vehicles, caused by the timing and volume of lease terminations in a relatively soft used vehicle market. The gain on disposal of operating leases terminated in the United States (which is reflected as a component of operating lease depreciation expense) decreased from an average of $212 per vehicle in 2002 to an average of $73 per vehicle for the same period in 2003.

Interest and discount expense increased due to higher debt levels required to fund the growth in assets. GMAC’s unsecured borrowing spreads tightened significantly in the second half of 2003 but the wider credit spreads experienced over the past year have negatively impacted GMAC’s net interest margins. The impact of the increased spreads will continue to affect results, as maturing debt funded at lower spreads is replaced with higher-priced debt. Refer to the Funding and Liquidity section of this MD&A for further discussion.

The provision for credit losses decreased by $618 million as compared to 2002. The decrease in the provision is due to a combination of unusually high loss provisions recognized in 2002 in the Company’s non-automotive dealer portion of the commercial portfolio and slower asset growth in 2003 in consumer automotive receivables, as compared to 2002. These favorable impacts have been partially negated by higher loan loss provisions in certain countries in the Company’s International operations. Refer to the Consumer Credit Risk section of this MD&A for further discussion of the credit quality of the Company’s financing portfolio.

The 16% decrease in other income in 2003 was caused by a number of factors. In particular, a significant portion of the decrease relates to a reduction in interest income on loans to GMAC subsidiaries and to GM, caused primarily by the decline in market interest rates. In addition, decreases were caused by lower revenues from off-balance sheet securitization activities (both gains and ancillary income) as the Company continued to structure more securitization transactions as secured financings. Financing operations were also impacted by unfavorable market adjustments on interest rate swaps used to facilitate securitization transactions (which do not receive hedge accounting treatment), the results of which are recorded in other income. Somewhat offsetting these negative impacts was an increase in net revenues from the Company’s International full service leasing business, which continued to expand and grow in 2003.

Factors Affecting Future Results

As the financing of GM manufactured vehicles comprises a substantial portion of the Company’s Financing operations, any protracted reduction or suspension of GM’s production or sales resulting from a decline in demand, work stoppage, governmental action, adverse publicity, reduction of financing incentives, or other event could have a substantial unfavorable effect on the Company’s results of operations. Conversely, an increase in production or a significant marketing program could positively impact the Company’s results. Information about GM’s production and sales is disclosed in GM’s Annual Report on Form 10-K for the year ended December 31, 2003, filed separately with the United States Securities and Exchange Commission.

The Company’s Financing operations operate in a highly competitive environment. The Company’s principal competitors for consumer automotive financing are a large number of banks, commercial finance companies, savings and loan associations and credit unions. Commercial financing competitors are primarily comprised of other manufacturers’ affiliated finance companies, independent commercial finance companies and banks.

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GMAC Mortgage Group, Inc. (the Mortgage Group) is comprised of three wholly-owned subsidiaries: GMAC Residential Holding Corp (GMAC Residential), GMAC Commercial Holding Corp (GMAC Commercial Mortgage) and GMAC-RFC Holding Corp (RFC). The principal activities of the Mortgage Group involve the origination, purchase, servicing and securitization of consumer (i.e., residential) and commercial mortgage loans and mortgage related products. Typically, mortgage loans are originated and sold to investors in the secondary market, including securitization sales that are legally sold but are accounted for as secured financings (see the Off-balance Sheet Arrangements section of this MD&A for further information).

Overview, Products and Services

Consumer

Retail origination of consumer mortgage products occurs primarily through GMAC Residential, which provides residential real estate services nationwide. These services primarily involve the origination, sale and servicing of first and second lien residential mortgage loans and high loan-to-value mortgage loans. GMAC Residential’s products are offered to customers through retail and direct origination channels, which involve direct interaction with consumers through a retail branch network and direct lending centers. Mortgage loans are also originated through relationships with third-party brokers and correspondent mortgage bankers. At December 31, 2003, GMAC Residential had approximately 1,650 retail and direct loan officers (working through a network of origination offices located in 48 states) and relationships with approximately 2,000 third-party brokers and correspondent mortgage bankers.

Loans originated by GMAC Residential through the retail, direct and broker channels are processed and underwritten using an automated mortgage origination platform. As part of the underwriting process, GMAC Residential ensures that the loan meets certain qualifications for sale in the secondary markets. For loans originated through a correspondent mortgage banker, loan origination activities are performed by that correspondent and the loan is acquired by GMAC Residential, subject to secondary market criteria acceptance procedures.

GMAC Residential also provides bundled real estate services to consumers, including real estate brokerage services, full service relocation services, mortgage services and settlement services. Through GMAC Bank, which commenced operations in the United States in August 2001, GMAC Residential offers a variety of personal investment products to its customers, including consumer deposits, consumer loans and other investment services.

RFC is engaged in several interrelated business lines, including mortgage origination and acquisition, investing, securitization and lending operations. RFC originates and acquires residential mortgage loans from correspondent bankers and brokers in the United States and Europe, and sells loans to public and private investors in the secondary market via whole loan sales and securitizations, including securitizations accounted for as secured financings. Residential mortgage loans originated and purchased include both prime and subprime first mortgages, as well as mortgages with second liens on residential property, including closed-end second mortgage loans and home equity lines of credit. At December 31, 2003, RFC had relationships with approximately 5,000 third-party brokers and correspondent mortgage bankers, maintained 41 offices in the United States, and had operations in Europe, Canada and Latin America.

Commercial

RFC also offers a number of commercial products and services. RFC’s warehouse lending activities provide interim financing, secured principally by mortgage collateral, to mortgage companies for the purchase or origination of mortgage loans pending sale to third-party investors. RFC also acquires seasoned or distressed mortgage loans and other real estate for resolution or resale, and manages portfolios of asset- and mortgage-backed securities acquired from unrelated

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Mortgage Loan Production, Sales and Servicing