GM is already working with AmeriCredit to provide auto loans to customers with "non-prime" or poor credit ratings. But this deal will also allow GM to do more with leases, which after almost dying during the recession are starting to make a comeback in the auto industry and could account for as much as a quarter of auto sales this year.
"This is a really good, strong, strategic move for the company. Every car they don't sell because of a lack of financing is money left on the table and negatively impacts the balance sheet," said Rebecca Lindland, an analyst with IHS Automotive.
The automaker said it will continue to work with Ally Financial, the former GMAC finance company, for loans to customers with good credit and to provide inventory financing for dealers.
It would be both politically and financially untenable to sever the relationship with Ally to channel all of its financing business to AmeriCredit, said Kirk Ludtke, an analyst at CRT Capital Group inStamford, Conn.
The federal government has approximately $57 billion of commitments -- including $17.9 billion of direct investment, $32 billion of federally insured consumer deposits and $7 billion of unsecured debt guarantees -- to Ally, he said.
"We continue to believe that the Obama administration is unlikely to allow either GM or Ally to pursue a strategy that would undermine the other," Ludtke said.
Moreover, Ally is a bank holding company, which would give it a funding advantage over a GM captive financing unit in the near term, he said.
Still, Ludtke said the AmeriCredit and transaction appears to be reasonably priced and manageable for GM. He said the in-house option will give the automaker some leverage when dealing with Ally and other financing providers. by latimes
Sponsored Link
0 comments:
Post a Comment