GM Said to Opt Against Credit Unit, May Team Up With Banks

  1. Welcome to GM Inside News Forum – General discussion forum for GM

    Welcome to GM Inside News Forum - a website dedicated to all things GM.

    You are currently viewing our forum as a guest, which gives you limited access to view most discussions and access our other features. By joining our community, at no cost, you will have access to post topics, communicate privately with other members (PM), respond to polls, upload content and access many other special features. Registration is free, fast and simple, Join GM Inside News Forum today!
     
Results 1 to 4 of 4

Thread: GM Said to Opt Against Credit Unit, May Team Up With Banks

  1. #1
    News Contributor Hurricane's Avatar
    Join Date
    Sep 2003
    Posts
    3,557
    Thanks
    0
    Thanked 0 Times in 0 Posts

    GM Said to Opt Against Credit Unit, May Team Up With Banks

    GM Said to Opt Against Credit Unit, May Team Up With Banks
    By David Welch - Jul 9, 2010

    General Motors Co. has decided against creating its own finance unit and is instead talking with banks including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. about bolstering its lending capabilities, people with direct knowledge of the decision said.

    The banks would write loans and leases on cars, helping to spur sales, said four people with knowledge of the situation who asked not to be named because the discussions are private.

    Chief Executive Officer Ed Whitacre aimed to get the automaker back into financing before its planned initial public offering this year, people familiar with the situation have said. The company considered buying back its former lending arm, GMAC LLC, starting a bank or working with outside lenders to offer customers more financing options, said three people with knowledge of the discussions. Buying GMAC, now called Ally Financial Inc., or starting a new, in-house banking unit proved too difficult at this point, they said.

    “They have to make sure they cover all of the credit tiers,” said Maryann Keller, president of consultant Maryann Keller & Associates in Stamford, Connecticut. “They can’t reacquire GMAC because its only basis for cheap capital is that they own a bank. GM can’t legally own a bank.”

    Selim Bingol, a GM spokesman, declined to comment. An Ally spokeswoman, Gina Proia, declined to comment.

    GM, based in Detroit, is looking for other banks to boost its subprime-lending and leasing capabilities, the people said. GM has missed out on some sales because GMAC, its primary retail lender, doesn’t lend to subprime borrowers, Mark Reuss, president of GM North America, has said.

    The carmaker works with Fort Worth, Texas-based AmeriCredit Corp. for subprime lending and Minneapolis-based U.S. Bancorp for leasing deals. GM wants more lenders to compete for the loans to lure customers with more options and better rates, the people said.

    Internal Debate

    GM executives had debated whether the company should own a lender, with some arguing that the automaker’s junk credit rating would make it costly to raise capital for loans, said three people.

    Chief Financial Officer Chris Liddell said last month that the company will consider a variety of sources for consumer car loans rather than carrying the assets and liabilities of a lending business on its books.

    The automaker could enlist outside banks to make car loans or write leases for consumers while branding the financing under the GM name, Keller said.

    In the longer term, GM may still have a chance of acquiring GMAC, two of the people said. For now, GM doesn’t see a way to do the deal, doesn’t want GMAC’s ResCap mortgage unit, and GMAC also wasn’t interested in selling, they said.

    The U.S. Treasury Department owns 61 percent of GM and 56 percent of GMAC. While some Treasury officials favor merging the two, the government doesn’t want to get involved in forcing a deal, the people said.
    Full text here: http://www.bloomberg.com/news/2010-0...for-loans.html
    2010 Infiniti FX35
    2007 Yukon XL Denali
    2012 Porsche 911 Carrera S

  2. Remove Advertisements
    GM Inside News
    Advertisements
     

  3. #2
    7.0 Liter LS7 V8 Rocket 88's Avatar
    Join Date
    Sep 2007
    Location
    NYC
    Posts
    4,808
    Thanks
    623
    Thanked 883 Times in 541 Posts
    My Ride
    2010 Charger AWD & 2003 Dakota

    Re: GM Said to Opt Against Credit Unit, May Team Up With Banks

    In the short term it might be better to work with existing banks, but it is a no-brainer that GM would be best off in the long term with it's own in house credit unit; assuming they don't screw it up again like they did with GMAC.

    Right now Toyota and Honda (and many other car manufacturers) can offer better leases terms the GM and Chrysler. Having been shopping for vehicles it looks like Ford is the only domestic with good lease deals.

    Oddly, there seems to be good financing available for purchases from the big 3.
    Hidden Content
    1954 Oldsmobile Rocket F-88.

  4. #3
    6.0 Liter L76 V8 Rick_VT's Avatar
    Join Date
    Jul 2006
    Location
    Canberra Australia
    Posts
    2,202
    Thanks
    8
    Thanked 222 Times in 121 Posts

    Re: GM Said to Opt Against Credit Unit, May Team Up With Banks

    What would it take for GM to be able to set up its own in-house financing arm?

    What are the requirements to do so?

  5. Remove Advertisements
    GM Inside News
    Advertisements
     

  6. #4
    6.2 Liter LS9 Supercharged V8 calgaryhhr's Avatar
    Join Date
    Apr 2008
    Location
    Calgary
    Posts
    6,218
    Thanks
    0
    Thanked 246 Times in 152 Posts
    My Ride
    06 Chevy HHR 09 Ford Flex Ltd

    Re: GM Said to Opt Against Credit Unit, May Team Up With Banks

    I would be interested in seeing some statistics on repossessed vehicles for sub-prime consumers. The subprime market must be very lucrative because it seems like there is a lot of emphasis put on targeting those consumers, in my opinion.
    Research is what I am doing when I don't know what I am doing.

  7. Remove Advertisements
    GM Inside News
    Advertisements
     

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
Powered by vBadvanced CMPS v4.1.2