When General Motors acquired then-subprime lending firm AmeriCredit in the fourth quarter of 2010, only 19 percent of the organization’s loan and lease business was associated with new GM vehicles (in the U.S.). But as AmeriCredit was integrated into The General and rebranded as GM Financial, that number grew to 44.6 percent (Q1 2012) and has recently surpassed the 50 percent mark (Q1 2013).
Since acquiring AmeriCredit, GM Financial has added prime and subprime leasing as well as commercial loans for dealers to its portfolio of financial offerings. To note, AmeriCredit briefly offered leases and prime-risk lending before its acquisition, but returned to its core business of subprime loans when the economic recession hit in 2008. Marking a complete turn of events, GM Financial will begin offering prime loans in early 2014 — thereby filling the only remaining hole in its offerings.
But it’s not GM Financial’s goal to completely replace or supplant other banks and lending institutions when it comes to consumer loans at GM dealerships, according to GM Financial President and Chief Executive Officer Dan Bierce. The GM subsidiary made similar remarks about floorplan (dealer loans) and about leasing.
“Our goal, simply put, is to provide GM dealers with a full suite of consumer products to go along with our commercial suite”, Bierce was quoted as saying.
The GM Authority Take
The fact that The General has itself a full-blown captive finance arm once again — as every global automaker that takes its business seriously should — is great news for GM dealers and for GM car buyers, as it presents more financing and leasing options. And rather than giving third-party firms the ability to profit from the financing of a loan or lease, it will now be GM that collects the profits associated with consumers financing its products — thereby making GM even more profitable.
Good stuff all around, GM. Good stuff, indeed.