GM to acquire AmeriCredit Corp for $3.5 billion

Article by Christian A., on August 29, 2010

General Motors Co. has entered a deal to acquire subprime specialist AmeriCredit Corp. for $3.5 billion. This all-cash deal marks GM's return to the captive finance business.

In a statement, GM described this acquisition as establishing the core of a new GM captive finance arm, which will help the carmaker reach more customers through leases and loans to borrowers with flawed credit records.

According to three people who are familiar with the talks, GM considered buying back former lending arm GMAC LLC (Ally Financial Inc.). GM also thought about starting a bank or working with outside lenders to offer more financing options to customers.

These sources said that GM found it too much of a challenge at that point to buy back GMAC or start a new, in-house banking unit.

Joe Phillippi, principal of AutoTrends, a consulting firm in Short Hills, N.J., said that this deal enables GM to finance less-than-perfect-credit buyers, which he says are plenty today especially with the current economic conditions.

He added that this region of people who have imperfect credit histories has been the core of GM's strength. [via autonews - sub. required]

Topics: gm, united states

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