The US arm of finance house GMAC is to restrict its new car
finance to prime customers in a move which could spell further
trouble for GMAC’s former parent, General Motors.
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GMAC will no longer accept customers with a FICO credit score
lower than 700 (with a score of 680 and above usually considered
‘prime’), and virtually ceased lease origination in September. The
tightening of its underwriting practices will hurt GM, as US car
buyers find it more and more difficult to finance their purchases,
and dealers are as a consequence unable to shift their
stock.
The decision was taken after the ratings agency Standard &
Poor’s put GMAC and GM on CreditWatch with negative implications on
October 9, which may further raise the cost of funds for GMAC. But
it is “too early to say” what the long-term implications for GMAC’s
operations in the UK will be, a spokesman said.
Meanwhile, GM has denied the rumoured news that it is preparing
to swap its 49 per cent stake in GMAC for the car-making operations
of Chrysler, owned by Cerberus, the private equity house which
bought the controlling stake in GMAC from GM in 2006.
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By GlobalData
