There’s nobody for GM to buy except Ally,” a second source said. “There’s no independent guy out there that only does floorplan financing. The only other providers of floorplan financing are large banks such as Wells Fargo & Co WFC.N, Bank of America Corp BAC.N and JPMorgan Chase & Co JPM.N, or captive finance arms of other automakers, such as Ford Motor Credit. GM’s bargaining position in a deal is weakened by the fact that it has few alternatives to Ally as acquisition targets, people close to the process say. But GM’s $23 billion IPO reduced the Treasury to a minority shareholder, meaning the automaker could have a freer hand. Treasury, was sensitive about using taxpayer money to fund a deal, the sources said. GM approached Ally last year about buying auto finance assets, but the talks broke apart after the two parties could not agree on a price, several people with knowledge of those discussions said.Īnother complicating factor was that GM, then majority owned by the U.S. “We are always concerned about our financing position, particularly in the wholesale area,” Akerson told reporters in Detroit. GM Chief Executive Dan Akerson declined to comment on whether GM could buy back a stake in Ally when asked last month. “GM is very uncomfortable with somebody having that high of a market share,” said the person, who asked not to be named because he was not authorized to discuss the matter. Such a deal would cost between $9 billion and $10 billion - compared with the $12 billion of free cash flow the restructured GM is expected to generate annually, he said. market.Īcquiring an auto financing arm with $50 billion in assets could boost GM’s sales by at least 200,000 cars annually, Jonas said. government even after its successful IPO late last year - attempts to build momentum in a recovering U.S. That would take GM back to near where it started with GMAC when it founded the finance arm 1919.Īll of the options carry risks for GM as the automaker - still 33 percent owned by the U.S. dealers and millions of American consumers. The longshot alternative: a deal for GM to buy back financing from Ally for its 4,500 U.S. automaker needs to negotiate a new set of arrangements with Ally for providing financing for dealers and subsidized deals to lure new car buyers, since the current financing agreement with Ally expires in 2013. “Has GM discovered a way to sustainably run an auto company without a significant captive finance (subsidiary)? We do not think so,” Morgan Stanley analyst Adam Jonas wrote in a January 20 note for clients.Īt a minimum, the top U.S. REUTERS/Rick WilkingĪs GMAC, now renamed Ally Financial, prepares for a stock offering to start repaying taxpayers for its $17 billion bailout, GM is being forced to rethink its go-it-alone strategy - and some analysts and bankers say GM still needs its former affiliate, after all. A GM sign is seen outside the Medved General Motors car dealership in Arvada, Colorado August 12, 2010.
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