GM Financial to expand into markets and compete against Ally Financial

Article by Christian Andrei, on February 7, 2011

Plans are in place for GM Financial (General Motors Co.'s auto lending branch) to expand into markets that may put it in direct competition with Ally Financial Inc. GM owned Ally, formerly GMAC Financial Services, until 2006.

GM and its affiliates still have a 9.9% stake in GM Financial. A recent report from The Wall Street Journal reveals that GM Financial will soon start lending to customers in Canada, one of Ally's markets, and possibly auto dealers.

The report further stated that Ally handles about 80% of lending to GM dealers. GM Treasurer Dan Ammann told the Journal that this move is an attempt to increase sales by making credit more widely available to car buyers.

GM Financial, formerly AmeriCredit, plans to get into vehicle leasing as well as expanding loan volumes to lower-credit car buyers due to the potential profits.

Ally is preparing for an initial public offering this year. A Bloomberg report revealed that the financing firm has chosen underwriters Citigroup Inc., Goldman Sachs Group, J.P. Morgan Chase & Co. and Morgan Stanley to lead the offering. It is still uncertain what the working relationship of GM and Ally will be in the wake of the offering. [via autonews - sub. required]

Topics: ally financial

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