Opel, General Motors’ wholly owned subsidiary in Germany, has started to offer new-car loans as a means to increase auto sales — and turn a profit.
Opel Financial Services began operating in April with financing deals such as 0% interest with no down payment, Chief Financial Officer Michael Lohscheller said at a press conference today at the automaker’s headquarters in Frankfurt. The financing arm kicked off in eight countries, and is “an integral part of our plan to gain marketshare and return to profitability,” Lohscheller said.
The new venture is part of GM’s return to lending after it began unloading financing arm General Motors Acceptance Corp., now known as Ally Financial, in 2006. Opel’s lending arm will be a division of GM Financial, which bought a portion of Ally’s business in Europe, Latin America, and China last month. Roughly 40% of Opel’s new-car sales are financed, compared with the European auto market average of 50%.
Since 1999, GM’s European deficit surpasses $18 billion. Its business in the region, which also includes Opel’s U.K.-based sister brand Vauxhall, tapered its first quarter loss to $175 million from $294 million last year. Through 2016, GM intends to invest $4 billion for the development of 23 new vehicles and 13 new engines to help the European arm break even by 2015.
GM, the world’s second-biggest automaker, aims to uphold marketshare this year during a sixth successive shrinkage in industrywide European car sales. 1Q13 registrations at Opel and Vauxhall, whose lending arm will operate as Vauxhall Finance in the U.K., fell a combined 7.9%, less than the 9.7% decline of the market, according to the ACEA trade group.
Opel was founded in 1862, and has been a wholly owned subsidiary of Detroit-based GM since 1931.