The more I read about GM’s $3.5B acquisition of auto finance company AmeriCredit (ACF), the more confused I get.
The government-controlled GM is getting back in the subprime lending business only a few years after arguably the worst credit crisis since the Great Depression. Yet memory appears to be short-lived, at least for GM. From WSJ’s Sharon Terlop:
The deal gives GM an in-house auto lender for the first time since it sold control of its GMAC finance arm in 2006, leaving it the only major car maker without a so-called captive finance arm.
GM sees the acquisition as a way to drive up sales, which is critical as the company plans a return to the public stock markets as soon as this fall.
“Dealers and customers have said not having in-house finance arm hurts our ability to offer loans and leases,” GM Chief Executive Edward E. Whitacre Jr. said in a conference call with analysts and media. “We were not as competitive as we could be.”
Evidently, GM is convinced that heading down this road will make itself a more well-rounded company and one that should become more popular by the time it’s ready to go public again.