GM to use GM Financial for subsidized leases, from MarketWatch.
General Motors Co. plans to use its GM Financial lending arm as the exclusive provider of subsidized leases in the U.S., a move that could help boost earnings while significantly increasing the Detroit auto giant’s exposure to auto loans.
The move, which largely edges out Ally Financial and U.S. Bank from GM’s lucrative subsidized leasing business, comes nearly a decade after GM sold GMAC (later renamed Ally). At the time of the sale, GM’s credit ratings were dragging down the ratings of the finance arm, and the auto maker was in need of cash.
A GM spokesman said the move “is consistent with our strategy to provide customers with transparent, competitive financing products. In this role, the GM Financial team will be able to help our dealers maintain strong lease loyalty by enhancing the customer experience (and) providing simplified lease programs.”
GM will first roll the program out at GMC and Buick dealers, then move to Cadillac and eventually Chevrolet. To date, GM had been using its recently founded GM Financial arm to offer dealers another option when trying to finance a buyer.
