General Motors is currently in talks with JPMorgan Chase and Wells Fargo to improve access to financial assistance for customers in GM showrooms.
Since selling GMAC (now Ally Financial), GM dealers have voiced dissatisfaction about access to funds for subprime buyers and in financing vehicle leases, identifying a barrier to increasing GM’s market share in the United States. GM share of the U.S. automotive market has decreased from well over 48 percent in the 1960s to 35 percent in 1990 and to 19 percent today. As such, boosting market share is a top priority for The General.
The negotiations with the two financial institutions would make financing more widely available to subprime buyers and leases. Access to the subprime market would also remove investor concern surrounding GM prior to the company’s intended IPO.
GM spokesman Tom Wilkinson acknowledged that “access to financing is an important part of the vehicle sales process. We believe the auto financing business will continue to evolve and we’ll continue to assess our overall needs.” As recently as May, GM was considering options that would have once again put the company in control of a lending arm. The current owner of Ally Financial – the US Treasury – was not keen on the idea of GM and rejected proposals to transfer control of the auto financing arm back to GM.
In the first quarter of 2010, Ally provided financing for about 30 percent of GM’s sales while JP Morgan was the number one auto lender in the US, with Wells Fargo coming in second.[Source: Automotive News]