General Motors Financial Company, a fully-owned subsidiary of General Motors, has announced that it has completed the acquisition of equity interest in “the top-level holding companies that comprise substantially all of Ally Financial, Inc.’s automotive finance and financial services businesses in Latin America and Europe.”
GM first announced plans to purchase Ally’s foreign business operations in November of 2012, including those in Germany, United Kingdom, Italy, Sweden, Switzerland, Austria, Belgium, the Netherlands, Chile, Colombia and Mexico.
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The completion of these transactions means that GM now has captive financing operations in Europe, Latin America, and in North America. This has been a long time coming, as the effort to establish captive finance units commenced in 2010, when it purchased AmeriCredit, which in turn became GM Financial.
By operating its own finance units, The General is gaining a significant competitive advantage in providing purchase-level financing options to its customers, which allows for better financing offerings at time of purchase. Specifically, these options are usually more strategically-integrated with a manufacturer’s incentives. In addition, GM is also gaining the opportunity to generate revenue on the financing side (“back-end”) of the transaction, thereby contributing to its bottom line (“closing the loop” on vehicle sales process), giving the company the ability to increase its profitability.
And that’s what we call good business strategy.