General Motors is talking to financial institutions to try and make more auto loans available to buyers.
The move temporarily postpones any plans for the company to acquire its own lending arm, sources told the Wall Street Journal.
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The automaker sees the difficulty of providing credit to more consumers, particularly those with weaker credit, as a barrier to winning back US market share at a time when the company is looking to become more attractive to analysts and investors ahead of an initial public stock offering, the paper noted.
GM sold control of its GMAC finance arm three years ago, making it one of the few major automakers in the US market without a captive lender which can make credit available to boost sales of cars and trucks.
GM executives believe that entering into deals with other lenders such as major banks won’t provide the same boost GM would have received with its own finance company, but see it as a step toward eliminating the disadvantage, the sources said.
GM likely will continue to work with GMAC (which also finances Chrysler dealers and vehicle buyers) but wants other lenders to plug gaps where it feels GMAC hasn’t been willing to free up loans, including in subprime lending and leasing, the sources added.
GM has looked at establishing its own finance company or regaining control of GMAC’s auto lending business but the reacquistion ide ended because GMAC wasn’t interested in a deal, the sources said.
GMAC, now known as Ally Financial, will continue to provide the majority of wholesale loans to GM dealers. It told the WSJ in a statement it remains committed to working with the automaker, noting it has increased retail market share among dealers, but dealers reportedly have complained they are forced to turn away customers because of an inability to access financing.
