GM pays to keep financing in-house
Friday 23 July 2010
The bailed-out US car maker General Motors is spending $3.5bn (£2.3bn) to acquire Americredit, a car finance company, so it can help drivers afford its vehicles.
Unlike rival car companies, GM has been without an in-house lending division since selling off a majority stake in Gmac to raise money in 2006, which analysts say has put it at a disadvantage.
Ed Whitacre, GM's chief executive, said having a vehicle financing arm was vital to getting the best price for the company's upcoming stock market flotation, which will put a value on the US government's 61 per cent stake.
GM had held talks about recombining with Gmac, which is now majority-owned by the US government, but the negotiations stumbled. Gmac is being renamed Ally Financial and will focus on growing its online bank.
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