Filed under: Car Buying, Chrysler, GM, Earnings/Financials



In a word, yes. The Detroit News reports that General Motors is looking to find a way to tap into the subprime lending market that accounts for 16 percent of the overall car-buying market. There is, after all, plenty of pressure to sell more vehicles to enhance the company's value leading up to its initial stock sale. But while GM would like to strategically go after subprime borrowers, there is one significant roadblock in the way; Ally Financial. The financing firm, which was GMAC until The General sold off its captive finance arm prior to bankruptcy, apparently isn't willing to endeavor into risky loans. Ally, like The General, is owned in part by the federal government, with government cash in its coffers.

Top GM North America executive Mark Reuss reportedly told the Motor City newspaper that the automaker wants to have more autonomy over whom it lends money to, and it's all about moving more metal. Reuss points out the fact that 20 percent of Honda's new car sales are currently to subprime borrowers, adding "it would sure help my sales, the company's sales in North America, if we were able to get access."

If GM were to wrestle back a controlling interest in Ally, the company that could be most concerned with the result could be Chrysler. The Pentastar also depends upon Ally for vehicle financing, and CEO Sergio Marchionne points out that "if they control the lending practices and the degree of penetration and support that they gave to Chrysler, that would make us very, very concerned."

At this point, Reuss claims that GM hasn't yet asked Ally to expand subprime loans, so there is a chance that the two companies will be able to reach an agreement without GM getting back into the loan business.

[Source: The Detroit News | Image: Mark Ralston/AFP/Getty]GM seeking more subprime buyers? originally appeared on Autoblog on Tue, 18 May 2010 11:01:00 EST. Please see our terms for use of feeds.



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