Ally Division Gets Purchased by GM
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UPDATED: Nov 28, 2012
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General Motors has purchased the Latin American, European and Chinese auto loan operations of Ally Financial.
“GM is entering the most aggressive rollout of new vehicles in its history and this acquisition will make us an even more formidable competitor by ensuring that competitive financing is available to our customers and dealers around the world,” said Dan Ammann, GM’s Senior Vice President and CFO, in a GM press release.
GM Financial was created in 2010 in order to help facilitate auto loan financing for consumers in the United States and Canada. GM intends to use the recently purchased Ally International Operations to help borrowers in diverse markets around the world.
“The Ally International Operations have very strong underwriting and risk management, close relationships with GM dealers and an excellent customer service reputation. The addition of these businesses significantly strengthens GM Financial’s core role, which is to support the sale of GM vehicles. The international operations leadership team will also transition to GM Financial, which will provide tremendous continuity for stakeholders and customers,” said Dan Berce, GM Financial’s President and CEO.
The European operations that were purchased from Ally are in Germany, the United Kingdom, France, Italy, Belgium, the Netherlands, Sweden, Switzerland and Austria. In Latin America, Ally operated in Brazil, Mexico, Colombia and Chile. Ally’s operations in China were under the GMAC-SAIC Automotive Finance Company, which is partially owned by the non-banking lender Shanghai Automotive Group Finance Company.
In order to afford purchasing these foreign auto loan financing operations, GM transferred $2 billion to its financial division.
GM Financial will increase its assets to $33 billion as a result of this sizable purchase. It will now be liable for $27 billion worth of financing which includes consolidated debt. This is a near doubling of GM’s current liability of $12 billion.
Ally has been seeking to sell off several of its auto loan divisions in order to repay taxpayers for bailout funds it took at the height of the financial crisis. This recent purchase should put Ally, which is majority-owned by the federal government, on the right track to repaying taxpayers and clearing its books of debt.