GM hits auto finance market again with AmeriCredit purchase

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General Motors is back on the auto finance block after buying AmeriCredit (Photo Credit: ThinkStock)

According to Los Angeles Times reports, General Motors is looking to get back into the auto finance game, with a little help from AmeriCredit Corp. The beleaguered automaker plans to purchase AmeriCredit for $3.5 billion in cash. That’s $24.50 per share. AmeriCredit will fill the void left by GMAC –which spun out of control during the recession – and enable General Motors to offer customers attractive leasing and finance options.

Will AmeriCredit help GM regain competitive market share?

GM CEO Ed Whitacre said in a statement that “Adding AmeriCredit to our team will improve our competitiveness in auto financing offerings, and I am very pleased to have them on board.” At present, action is already under way to devise auto loans for consumers with less than perfect credit. Interestingly, these auto loan products are rumored to be of the “non-prime” variety, according to the Times. It is predicted that with AmeriCredit’s assistance, GM will experience a leasing resurgence to the extent that it could encompass a quarter of the automaker’s total sales in 2010.

GM won’t forget its Ally

Due to government auto bailout investment obligations, previous GMAC group lender Ally Financial will once again work with GM despite the AmeriCredit purchase. Ally will loan to customers with higher credit scores and assist with dealer inventory financing. The Times reports that Ally is also a bank holding company, which gives it a funding advantage AmeriCredit may not have under the GM banner.

The taxpayers are waiting

The federal government currently owns 61 percent of GM, as the automaker rose from the ashes of bankruptcy reorganization a mere 12 months ago. Thus, the GM AmeriCredit purchase should be a story of no small interest to taxpayers. If the GM/AmeriCredit affiliation proves to be lucrative, taxpayers will in theory recoup their bailout money more quickly. Shares of AmeriCredit are up 22 percent this morning, and Americans hope for more of the same.

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Los Angeles Times

GM CFO Chris Liddell speaks to Bloomberg re. value of the AmeriCredit purchase

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