GM may return to the auto-lending business and buy back GMAC

Article by Christian Andrei, on August 27, 2010

Sources say that more than three years after selling control of GMAC LLC, General Motors Co. could return to the auto-lending business. These insiders, who are familiar with GM's plan but decline to be named, say that GM may buy back the GMAC business, start a new finance company or form a partnership with banks and other lenders. GM's profit could increase if it has its own finance arm. 

This would then give its dealers competitive leasing and loan offers. One of the sources also said that CEO Ed Whitacre aims to put up an in-house lender before taking the company public again as early as the fourth quarter of this year.

Last month, GM repaid government loans, and having an initial public offering will enable the US to lower its 61% stake in the automaker. Rebecca Lindland, an analyst at IHS Global Insight in Lexington, Mass., said that the IPO will be "more of a success" if GM can increase its sales further.

She said that GM will be able to do this if it becomes more aggressive in its financing and that means having its own finance firm. Whitacre has his management team looking at all the available options.

By acquiring GMAC (now known as Ally Financial Inc.), GM would have a ready-made lending operation. To obtain those operations, GM would have to execute a deal with the US Treasury, which owns 56% of GMAC. [via autonews]

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