Negotiations are ongoing between General Motors Co. and JPMorgan Chase and Wells Fargo over proposed deals that aim to give better access to consumers for auto loans at its US dealerships, according to two insiders who asked to remain anonymous due to the confidential nature of the talks.
After GM sold control of Ally Financial Inc, formerly known as GMAC LLC, complaints have been received from dealerships about the difficulty to secure loans for subprime customers and to finance vehicle leases.
As a consequence of the sale, GM became the only major automaker in the US market that doesn't have a captive finance company. The sources said that dealers are pointing to the lack of financing as an obstacle for GM to gain back its market share in the US, which is currently near 19%.
In 1960, GM's market share was more than 48% of the US market while in 1990, it was about 35%. The talks with JPMorgan and Wells Fargo are meant to widen the availability of auto financing to subprime borrowers and for leases in particular.
Doing this would remove the possibility of investor apprehensions before a scheduled initial public offering. In a statement, GM spokesman Tom Wilkinson said that the carmaker is cultivating relationships with banks aside from Ally for its specialized financing needs, including leasing and subprime financing.
He said that having access to financing is a crucial aspect vehicle sales. He also expressed confidence that the auto financing business will continue to evolve and with that, it will continue to assess its overall needs. JPMorgan and Wells Fargo have yet to comment on this report. [via autonews]