The Wall Street Journal reported this week that General Motors might try to buy Ally Financial's GM floorplan business.
An Ally spokeswoman refused to comment. But for Ally to sell its wholesale finance business to GM would be unthinkable.
Ally is one of the industry's largest providers of inventory financing to car dealers. It finances more than 80 percent of GM dealers' new-vehicle inventory.
Floorplan financing is lucrative and an integral part of Ally's business model. Its dealer rewards program provides incentives for dealers to have floorplan accounts with Ally. And dealers with floorplan accounts get breaks on their floorplan interest rates for funding large shares of their retail loans through the bank.
The loss of the GM wholesale finance business likely would undermine Ally's plans for an initial public offering this year. The public offering is necessary to buy back the government's stake in the company. The U.S. Treasury Department owns 73.8 percent of Ally's common stock.
Mark Wasden, a senior analyst for Moody's Investor Service, refused to speculate on a possible sale but he said the GM wholesale finance business “couldn't be sold without it negatively affecting our view of the company's fundamental business proposition.”
So would Ally sell its GM floorplan business? I don't think so.