GMAC 2.0

AmeriCredit is the new GMAC, only five years since divestment of the old GMAC.  I am a strong believer in captive finance, and I never thought it made sense for GM to sell its lending arm.  Of course, in 2006, GM was already under financial pressure.

In 2008, as the situation worsened, I had lunch with a friend in the online credit business.  He remarked that GMAC had just about stopped making car loans.  The new owner, Cerberus, was taking measures to protect its capital – sensible for them, but not what a dealer wants to hear.

GM concluded that it needed a captive lending arm after all: in October it bought AmeriCredit.

I observed that GM would have to develop a new captive, to take care of its dealers.  GMAC 2.0, I said.  I might have added, after Chapter 11.

What followed was a mad rush to certify GMAC as a bank holding company and obtain TARP funds.  My DMS integration project was cancelled, and many of my friends at GMAC were laid off.   Last year, the new GMAC bank signed up with Dealer Track.  Of Route One’s exclusive captives, this left only Ford and Toyota.

When GM bought AmeriCredit, that seemed to validate my observation.  Oddly, GM was denying it as recently as January of this year.  That’s why this week’s announcement is important.  Adding floorplan proves that AmeriCredit, now GM Financial, is the new GMAC.

Author: Mark Virag

Management consultant specializing in software solutions for the auto finance industry.

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