GM plans direct finance

General Motors is restructuring its European finance operations to create a First Direct-style system that will allow it to compete head-on with more mainstream financial services companies.

The shift at General Motors Acceptance Corporation (GMAC) will be phased in over the next three years, involving the creation of a centralised on-line system for dealers and customers.

The restructure and the intro-duction of the new technology could lead to job losses at the company’s 18 finance offshoots, including Vaux-hall Finance in the UK. The new on-line system will be based in main land Europe, probably Germany.

However, the GMAC initiative underlines the growing importance of finance operations to car manufacturers such as GM’s subsidiaries, Opel and Vauxhall. The finance companies are crucial to generating retail car sales and they can now make better margins on lending money than retailing cars. GMAC is also responsible for the GM Card from Vauxhall.

The restructure will allow GM to run finance schemes – including Vauxhall’s Choices programme and its 50:50 scheme – across markets. But longer term, it positions the car company to expand into the direct selling of other financial products outside the motor trade; a development several manufacturers have been examining.

“The scheme is still at the planning stage,” says one source, “but GM is looking at developing a First Direct approach. It will enable the company to be more flexible and responsive to customer demands in the increasingly competitive financial services market.”

Vauxhall Finance managing direc-tor Mike Hinz was more cautious: “From our perspective the market is changing all the time in finance operations and as our customers become more sophisticated we need to change with them to meet these demands. In three to four years, the strategy we’re developing and the technology we’re testing will allow us to surpass their needs when it comes to helping them buy their cars.”