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GM Weighing Return to Auto-Lending Business, Sources Say

May 12, 2010
2 min to read


General Motors Co. may return to the auto-lending business more than three years after selling control of GMAC LLC, three people familiar with the company’s plan told Bloomberg.


GM may buy back the GMAC business, start a new finance unit or form a partnership with banks and other lenders, said the people, who asked not to be identified because details are private. Chief Executive Officer Ed Whitacre wants to form an in-house lender before selling shares in GM as soon as the fourth quarter, one person said.

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Having a so-called captive credit arm may boost GM’s profit, enable dealers to offer better terms on leases and loans, and make an initial public offering more appealing to investors, said Rebecca Lindland, an IHS Global Insight analyst in Lexington, Mass.


“The IPO is going to be more of a success if they can sell more vehicles than they have been selling,” Lindland said. “They should be able to do that if they can be more aggressive in their financing. Having their own finance company would certainly help.”


Whitacre has his management team exploring all options, the people said. Tom Wilkinson, a GM spokesman, declined to comment.


GMAC is now known as Ally Financial Inc. and is 56 percent owned by the U.S. Treasury after an injection of $17.2 billion under the Troubled Asset Relief Program.


Meg Reilly, a Treasury Department spokeswoman, had no immediate comment, and Ally’s Gina Proia said an acquisition of its auto-finance business by GM was “speculation.”

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