GM’s Ammann Considers Expanding Into Dealer-Inventory Financing

General Motors Co. (GM) Treasurer Dan Ammann, who takes over as chief financial officer on April 1, said the company is considering ways to expand into offering dealers loans for purchases of new inventory.

The largest U.S. automaker providing wholesale lending, also called floor-plan financing, would give dealers more borrowing options and better rates, Ammann said. Ally Financial Inc., formerly GM’s GMAC Inc. finance arm, provided 82 percent of floor-plan lending to GM’s dealers in the fourth quarter.

“We are looking at that,” Ammann said yesterday in a telephone interview. “There is a range of ways to go about it. There is a whole set of alternatives we are looking at.”

GM acquired Fort Worth, Texas-based subprime lender AmeriCredit Inc. in October for $3.5 billion to write loans for subprime consumers and boost car sales. Since December, GM has used the unit, renamed GM Financial, to expand leasing options for car buyers.

The automaker could use GM Financial to begin wholesale lending or expand into the business in other ways, Ammann said, without specifying the options.

“It’s something they certainly need to consider for their dealers so that they can keep healthy levels of inventory,” said Rebecca Lindland, an analyst at IHS Automotive in Lexington, Massachusetts. “When consumers are ready to buy, they’re ready to buy right now. Every consumer that walks out that door without a car is a sale lost.”

Captive Lending

GM Financial will be used to create the automaker’s own captive lending operation, he said. While the company will boost its subprime and leasing businesses, GM has no current plans to get into lending to consumers with prime credit records, Ammann said.

Prime lending “is well-served by Ally and the banks,” Ammann said. For wholesale lending, “we could use some competition there.”

GM Financial started a trial leasing program in Ohio late last year that has expanded into 20 other states through March, said Don Johnson, vice president for U.S. sales. GM expects to have leasing across the country by midyear, Johnson said last month.

Ammann also said GM will continue the balance sheet strategy put in place by outgoing CFO Chris Liddell, who had said he wanted to get GM’s debt paid off and its pension plan fully funded.

Liddell is leaving GM and has said he has “a number of interesting ideas” for his next job, without specifying any.

GM rose 24 cents to $31.68 at 9:37 a.m. in New York Stock Exchange composite trading. The shares have dropped 4 percent since their initial public offering in November.

To contact the reporter on this story: David Welch in Southfield, Michigan, at dwelch@bloomberg.net.

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net.

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