Is GM Looking to Resurrect Its Captive?
DALLAS — Someone must be delivering an “I told you so” speech within General Motors today.
That’s because news has surfaced yesterday that GM might be (read: is) looking to resurrect a captive financing arm. According to the rumors, GM will either seek to buy back the auto finance portion of Ally Financial, start its own financing venture, or partner with a bank.
You don’t have to read too deeply into Ally’s statements to discern the friction between the old GMAC and GM. Here’s what Ally’s spokesman told Reuters:
Gina Proia, a spokeswoman for Ally Financial, said the current relationship has benefits for GM. Ally also provides financing for Chrysler. Proia said because Ally is a bank-holding company it has access to lower-cost funding than a captive auto financing company would.“A manufacturer cannot own a bank,” she said. “By doing business with us, our (automotive partners) do not need to invest the billions of dollars of equity capital necessary to maintain a large balance sheet of loans.”
And to Bloomberg, Proia said:
“Our position is that if we are supporting our manufacturers and customers, then the relationship works.”
Whatever happens it has finally become clear to GM what I think most people in auto finance knew: that a manufacturer needs a captive, especially an OEM like GM, which heavily deploys discounts to move the metal.
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