"We're looking to re-enter the leasing business on at least a limited basis at some point in 2009," GM's sales chief for North America, Mark LaNeve, told Reuters.

As credit tightened and the economy slowed last year, GM's affiliated finance company, GMAC, stopped financing vehicle leases and tightened standards for vehicle loans sharply.

But last month, GMAC won approval to operate as a bank. The U.S. Treasury also agreed to take a $5 billion stake in the finance company to support GM's turnaround, which it has backed with $13.4 billion of government loans.

LaNeve said the recapitalization of GMAC and its transformation into a bank would help GM win new sales in the coming months after a weak close to 2008 when many of its customers came to assume that they would not be able to finance new car purchases at GM showrooms.

As GMAC's own funding tightened, GM "got out of leasing completely," LaNeve said in an interview on the sidelines of the Detroit auto show.

"We went from 20 percent of sales to zero," he said.

LaNeve said GM could look to sell up to 5 percent of its cars in the United States with leases if the secondary market for asset-backed securities turns more positive for new issues.

But LaNeve said GM would never go back to the kind of deeply subsidized leasing that boosted industry-wide sales volumes earlier this decade but proved costly when resale values of trucks and SUVs began to tumble.

In the second quarter of last year, GM said lease-related charges had depressed its earnings by $2 billion.

"I don't think we'll ever go back to driving volume through cheap leases but for certain segments, you really need to have a lease," LaNeve said.

"It's a great tool that proved to be a bad business model if you use it to push volume," he said. "We justified it as an industry because you were turning the vehicle every two to three years, but if you're losing money on every turn, it doesn't make any sense."

Detroit-based GMAC has traditionally provided the bulk of financing for GM retail customers, and also financing that dealers rely on to carry vehicle inventory.

But it has struggled under the weight of $7.9 billion of losses in the 15 months ending September 30, largely tied to soured mortgages in its Residential Capital LLC unit.

GMAC is owned by private equity firm Cerberus Capital Management LP and GM. The government bailout will result in both reducing their ownership stakes.

Some analysts have estimated that cheap vehicle leases inflated U.S. auto sales by as much as 2 million units per year earlier this decade when annual sales topped 17 million units.

Sales plunged to 13.2 million vehicles in 2008 from 16.2 million a year earlier in the world's largest vehicle market.

Most analysts expect sales to drop further in 2009, with forecasts ranging from 10.5 million to 12.5 million units.

As part of its turnaround plan, GM has forecast U.S. auto industry sales of between 10.5 million and 12 million vehicles this year.

(Reporting by Kevin Krolicki, editing by Matthew Lewis)