GM to expand new auto lending branch 02/04/2011
General Motors has announced that it will begin expanding GM Financial, its section devoted to auto lending, reports the Wall Street Journal.
According to Dan Ammann, the treasurer of GM, the automaker is expanding its financial arm in part to boost sales by providing more credit to potential customers. The group plans to increase profitability by doubling the number of loans to customers with bad credit, which has previously earned significant amounts of money for the company.
The expansion places GM Financial in direct competition with Ally Financial, another auto financing firm that was previously owned by the car company until 2006.
Ally, which is owned in part by the U.S. government after a federal bailout in 2008, reportedly offers financing to up to 80 percent of GM dealers. In addition to lending money to individual buyers, GM Financial is considering stepping into the dealer financing field as well.
The expansion of GM Financial has raised questions about the initial public offering of Ally stock later this year. Financial analysts for the lender are concerned about how the relationship between Ally and GM will affect the IPO.