Spanish bank Santander, owner of high street bank Abbey, is taking over GE Money Motor Finance.
It will make Santander one of the UK’s biggest dealer finance providers, in competition with Black Horse, Bank of Scotland Dealer Finance and Spanish group Mapfre.
GE is exiting the sector to concentrate on consumer finance where it believes it can make better profits.
One analyst told AM: “I don’t think we’ll see another acquisition on this scale in the short term.
With the credit crunch, people will be watching the fallout from this.
“If major players are pulling out of the market, it’s because they’re not making the margins they want.
"And if another player were to fall out it would be very bad for dealers.”
Santander will not discuss its strategy until the preliminary deal goes through regulatory procedures and is confirmed, which is expected to happen in early summer.
It is expected to invest heavily to make an impact in the sector with highly competitive rates.
GE Money has supported UK motor retailers through stock funding and the provision of financial products for point of sale.
The loss of GE has sparked concerns that less competition could lead to higher rates for stocking funds and point of sale finance, which would impact on dealer margins.
The analyst said: “Often dealers will play finance companies off against each other to get better rates.
"If there’s less room to negotiate, then that’s going to be an issue especially for those who rely on selling finance.
“If the finance companies don’t have to be competitive on rates then the balance of power may shift away from dealers.”
The switch of the UK motor finance business is part of a sale and exchange agreement between the two companies.
William Cary, GE Money chief executive, said “This is a win-win: Santander can get bigger in a market they know and we can take the capital we have tied up and put it to work in other places.”
GE is divesting consumer-finance businesses in the UK and Germany to focus on higher-margin areas and push into developing markets, such as India and Poland.
It has agreed to exchange its European GE Money businesses for Santander’s Italian commercial leader Interbanca. GE Money is also selling its US corporate credit-card unit to American Express.