General Motors has been up to a crafty way to lower funding costs and boost profitability for its auto-lending business. The automaker’s lending arm, GM Financial, has been taking retail deposits online through a subsidiary of the auto-lending arm, according to a report from NASDAQ.
The report states the move allowed the automaker to raise $1.3 billion in new funding during the fourth-quarter of 2015. GM also holds banking licenses in France and Brazil, leading analysts to suspect the automaker may begin a similar process in other countries. At this time, a GM spokesperson said there are no plans to expand the retail banking sector of its operations.
The retail deposits have also diversified funding and helped secure less risky lines of credit for the automaker. Since GM re-entered the auto-lending business, GM Financial’s revenue and liabilities has quadrupled by 407 percent.
The bank “offers overnight money and fixed-term deposits at highly attractive rates to German end-customers via an easy-to-use online banking platform,” and should allow GM to continue growing its financial sector, especially realizing how popular the system has been in Europe.
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In other words, Opel it’s up due to sub prime lending as opposed to better cars.