June 23, 2010 5:07 PM
- Text
Poor Credit? GM Wants You to Buy a Car
(AP)
General Motors Co. is looking to boost auto sales by lining up banks and other financial institutions to make loans and lease deals for buyers with poor credit.
The talks lessen the likelihood of GM trying to buy the auto finance business from Ally Financial Inc., its main lender. They also make it less likely that GM would start its own auto financing unit.
GM considered both options earlier in the year because Ally was reluctant to fund loan and lease deals to buyers with subprime credit. About 16 percent of loans for new cars and trucks went to subprime buyers in the fourth quarter of last year, but because of Ally's reluctance to lend to them, GM was unable to tap that market.
Subprime buyers are customers with credit scores below 620 on a 300-to-850-point scale.
"We are developing relationships with other financial sources on a selective basis for specialized financing needs, such as leasing and subprime financing." GM spokeswoman Renee Rashid-Merem said Wednesday.
GM continues to work with Ally, which used to be GMAC Financial Services, and it already has relationships with many banks and credit unions, Rashid-Merem said.
The automaker's sales are up about 15 percent through the first five months of the year, but they trail the increase for the overall U.S. industry by more than 2 percent. Crosstown rival Ford Motor Co. has seen its sales rise 30 percent compared with the first five months of last year.
Mark Reuss, GM's North American president, said in an interview last month that GM would like to tap into the subprime credit market to help lift sales. He said GM gets only 1 percent of its sales from subprime buyers, while Honda Motor Co. gets about 20 percent because it has better access to lending.
The talks lessen the likelihood of GM trying to buy the auto finance business from Ally Financial Inc., its main lender. They also make it less likely that GM would start its own auto financing unit.
GM considered both options earlier in the year because Ally was reluctant to fund loan and lease deals to buyers with subprime credit. About 16 percent of loans for new cars and trucks went to subprime buyers in the fourth quarter of last year, but because of Ally's reluctance to lend to them, GM was unable to tap that market.
Subprime buyers are customers with credit scores below 620 on a 300-to-850-point scale.
"We are developing relationships with other financial sources on a selective basis for specialized financing needs, such as leasing and subprime financing." GM spokeswoman Renee Rashid-Merem said Wednesday.
GM continues to work with Ally, which used to be GMAC Financial Services, and it already has relationships with many banks and credit unions, Rashid-Merem said.
The automaker's sales are up about 15 percent through the first five months of the year, but they trail the increase for the overall U.S. industry by more than 2 percent. Crosstown rival Ford Motor Co. has seen its sales rise 30 percent compared with the first five months of last year.
Mark Reuss, GM's North American president, said in an interview last month that GM would like to tap into the subprime credit market to help lift sales. He said GM gets only 1 percent of its sales from subprime buyers, while Honda Motor Co. gets about 20 percent because it has better access to lending.
Latest Now in MoneyWatch
- Judge: Legally, breastfeeding not related to pregnancy
- Budget deficit drops to $27 billion in January
- Why the Powerball Jackpot is part of my investment strategy
- Is the new VW Beetle diesel worth the money?
- Consumer sentiment highlights risks to recovery
- Valentine blues? 10 best cities to be single
- December trade deficit widens to $48.8 billion
- Alcatel-Lucent returns to profit in 2011
- 6 things never to say in a performance review
- $26B mortgage deal: Who gets the money?
- Friendly's CEO steps down
- Quarterly loss hits $3.3B at Postal Service
- Greeks rail against cuts as EU demands more
- 6 things you should never share on Facebook
- Make moves now to increase financial aid
- Valentine's Day: 9 places to save
- GreenCloud saves paper, toner, money and time
Latest CBS News Headlines
on Facebook
on CBS News
- Washington: Sales of homes up but prices down
- Blatter: Soccer is a victim of own popularity
- IPG Photonics 4Q net income up 15 percent
- Oil prices tumble on European debt concern
on Facebook
- Josh Powell had "incestuous" images on his home computer, authorities say
- Adele sings a cappella for Anderson Cooper
- Adele sings a cappella for Anderson Cooper
on CBS News
