http://www.nytimes.com/2010/07/23/business/23autos.html?partner=rss...

DETROIT — General Motors said Thursday that it had agreed to buy a financing company, AmeriCredit, for $3.5 billion so it can lease more vehicles and increase sales to consumers with lower credit ratings.

The transaction, expected to close in the fourth quarter, gives G.M. a captive financing arm for the first time since 2007, when it sold
control of GMAC
Financial Services. G.M. recently considered starting a new financing
arm or reacquiring GMAC, now known as Ally Financial, to strengthen its
lending capabilities and to raise the carmaker’s value ahead of a
public stock offering.

“Our dealers have been telling us that not having an in-house finance arm hurt our ability to finance certain loans and leases,” Edward E. Whitacre Jr.,
G.M.’s chief executive, said in a conference call. “It hurt our ability
to meet rising customer demand for G.M. cars and trucks. Now we’re
going to fix that.”

Analysts said G.M. and Chrysler, which lost its own captive financing arm, Chrysler Financial, during
last year’s bankruptcy reorganization, have been at a disadvantage
because they no longer had as much of a say in which customers could
get approved for loans as rivals like the Ford Motor Company and Toyota.

Jesse Toprak, the vice president of industry trends and insights at TrueCar.com, which tracks vehicle pricing, said G.M.’s sales could jump as much as 20 percent if it aggressively courts subprime buyers.

Mr. Toprak said many consumers have low credit scores because of isolated negative events like late bill payments but
otherwise pose a low risk of default. As a result, they are being
turned away by lenders who tightened their credit standards after
subprime mortgages helped cause the recession.

“They’re basically being ignored simply because of the paranoia. It used to be there was lending like drunken sailors, but now it’s the
opposite,” Mr. Toprak said. “If G.M. can fill in that void, there’s a
big potential for return for them.”

Shareholders of AmeriCredit, which is based in Fort Worth and has 3,000 employees, would receive $24.50 a share, a 24 percent premium over
Wednesday’s closing price of $19.70. AmeriCredit was founded in 1992
and has assets of about $10 billion.

G.M. will use money from its cash reserves, which stand at more than $30 billion as a result of the aid it received from the federal
government before and during last year’s bankruptcy.

“We’re in the fortunate position that we have a very strong balance sheet,” G.M.’s chief financial officer, Christopher P. Liddell, said.
“That gives us the flexibility to do acquisitions like this.”

G.M. said its ownership of the company would have minimal impact on its balance sheet and would not detract from its goal of regaining a strong
investment-grade credit rating. AmeriCredit will maintain direct access
to the capital markets for financing requirements, G.M. said.

G.M. executives have been seeking ways to improve sales in North America, where its earnings have greatly improved, but market share in the United States remains below year-ago levels. Owning AmeriCredit would let the company offer more leases and approve
customers that Ally or other banks might have rejected.

G.M. said its sales to customers with subprime credit ratings have increased “significantly” since beginning a program with AmeriCredit
aimed at writing loans for shoppers in that category last September.
Ownership of AmeriCredit, which already has a relationship with about
4,000 G.M. dealerships, “will allow us to provide a full range of
financing alternatives for all customers throughout all economic
cycles,” Mr. Liddell said.

General Motors said it would continue to use Ally Financial and other banks to procure financing for prime customers. The company still owns
9.9 percent of Ally; it was required under federal law to sell the rest
of its stake so that Ally could convert itself into a bank. Ally also
provides financing to customers of Chrysler dealerships.

Currently, subprime customers account for 4 percent of G.M. sales, in line with the industry average, but about 40 percent of the population
has a subprime rating, Mr. Liddell said.

“At the margin those are very good sales,” he said. “An extra percent here and an extra percent there will make a big difference from a sales
point of view.”

Only 7 percent of the G.M.’s vehicles are leased, compared with an average of 21 percent for the industry. G.M. and other automakers
sharply cut back on leasing, which is more popular for upscale
vehicles, when the credit markets tightened in 2008.

AmeriCredit’s chief executive, Daniel E. Berce, said the company did not plan to stop financing customers of G.M.’s competitors. G.M.
currently accounts for 15 percent of AmeriCredit’s business.

Mr. Berce said most of AmeriCredit’s 800,000 customers had credit ratings of 500 to 650. A rating below 640, on a scale that ranges from
300 to 850, is generally considered subprime.


Views: 48

Reply to This

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega posted a blog post

What Has Tulsi Gabbard Been Up to? Oh, Just catching Obama's ass ordering Intelligence Agencies to Commit Treason!

As we can always expect, the mainstream media will do anything they can to undermine the Trump…See More
13 hours ago
Burbia commented on tjdavis's blog post The Jewish Couple That Taught Bob Dylan Hebrew and Introduced Him to Zionism
"Haaretz put this story behind a pay wall. Sali Ariel and Terry Noble were the names of the couple…"
15 hours ago
William Heckman is now a member of 12160 Social Network
18 hours ago
cheeki kea commented on tjdavis's photo
21 hours ago
cheeki kea commented on cheeki kea's video
Thumbnail

This Woman DESTROYED Harley-Davidson's Future Forever

"It's a sad day on the highway. But I guess the show must go on. Watch out for the ruination of…"
22 hours ago
cheeki kea posted a video

This Woman DESTROYED Harley-Davidson's Future Forever

This Woman DESTROYED Harley-Davidson's Future ForeverWelcome to Ride Radar – Your Frontline Source for Motorcycle Deals, Trends & Market Mayhem.Looking for t...
22 hours ago
tjdavis posted a photo
yesterday
Burbia posted a status
"Who knew releasing the MLK files and literally deflecting, it ends up implicating himself with the Epstein Files."
Tuesday
Burbia posted a video

Dan Bilzerian DEMOLISHES MAGA Nutjob Patrick Bet-David on His Own Show

Watch as two powerhouse personalities collide in this no-holds-barred debate on one of the world’s most contentious issues. Patrick Bet-David, known for his ...
Monday
Doc Vega's 7 blog posts were featured
Sunday
tjdavis's 2 blog posts were featured
Sunday
Less Prone favorited tjdavis's blog post Track AIPAC
Sunday
FREEDOMROX's blog post was featured

MRNA VACCINES: Question

Hello my fellow sojourners,I know it has been five years since the Plandemic, but one question has…See More
Sunday
Less Prone favorited FREEDOMROX's blog post MRNA VACCINES: Question
Sunday
cheeki kea commented on cheeki kea's photo
Saturday
cheeki kea posted a photo
Saturday
Doc Vega posted blog posts
Friday
Doc Vega commented on Doc Vega's blog post Marjory Taylor Green Proposes Bill Abolishing Geoengineering or Weather Modification
"cheeki kea Marjory is in a daily battle with Democrats on the hill constantly coming up with more…"
Friday
Doc Vega posted blog posts
Jul 16
Mr. Sizzle favorited Less Prone's video
Jul 15

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted