General Motors has reached an agreement to acquire the remaining assets of Ally Financial Inc.'s international auto-finance businesses for $4.2 billion, as it aims to stimulate recovery in Europe and South America. Ally said in a statement that the purchase by the carmaker’s GM Financial unit includes operations in Europe and Latin America, as well as Ally's 40-percent holdings in an auto-lending joint venture in China.
In May 2012, Ally said that its China operations were not included in the non-US assets that it was seeking to divest. In a separate statement, GM Chief Financial Officer Dan Ammann remarked that GM is entering the most aggressive rollout of new vehicles in its history, noting that the acquisition will make the carmaker even more of a formidable competitor by making sure that competitive financing is available to customers and dealers around the world.
GM is hoping to turn around its operations in South America, after its business in the region posted a $122 million operating loss in 2011, in contrast to $818 million profit in 2010. GM also continues to bleed in Europe, losing over $17 billion since 1999. GM currently banks on its North American operations for most of its profit while seeking to diversify revenue sources.
Ally chief executive Michael Carpenter is selling assets to gain cash to repay taxpayers for a $17.2 billion bailout during the credit crisis. He is confining the focus of Ally, formerly known as GMAC Inc., to auto lending and US banking. GM owned GMAC until 2006, when the carmaker divested 51 percent of it to Cerberus Capital Management LP. Carpenter said in a May interview that divesting international units may help Ally repay two-thirds of the federal bailout.