GM Financial reports that the percentage of GM vehicles that were leased during the first quarter of the year was up compared to GM vehicle leases last year. The share of GM sales that were leases was up to 16.5 percent in Q1 of 2023, as compared to 13.9 percent during the last half of 2022. Despite the increase in lease sales mix this year, the Q1 2023 lease percentage figure was still down considerably from the 24-percent figure recorded at the end of the 2019 calendar year.
In an interview with Automotive News, GM Financial CEO Dan Berce said that leasing was historically a “highly incentivized product; without the need for incentives to drive sales, leasing mix is going to be where it’s at.”
Berce added that the lease sales mix likely hit its low point midway through the 2022 calendar year, and although it is expected to continue on an upward trend, it was unlikely to “reach historical levels anytime in ’23.”
This prediction echoes forecasts for the broader automotive industry, with Cox Automotive indicating that the lease sales mix hit a 10-year low last year, and was not expected to rise to the same levels seen in 2019. According to Experian, leasing sales mix for the broader automotive industry was down roughly 10 percent last year as compared to figures from 2020, and while the average monthly lease payment is going up, it remains lower than the average monthly auto loan payment.
In the recent GM Q1 2023 earnings call held this past April, GM CFO Paul Jacobson indicated that incentives and pricing would normalize in response to slightly lower demand.
Reports indicate that GM Financial originated $3.9 billion in leases for the first quarter of the year, an increase from $3.5 billion originated a year prior due to an increase in retail sales and the amount financed. Meanwhile, lease income fell 39 percent to $584 million. The captive finance arm’s lease portfolio shrank due to a lower leasing mix, as well as higher used vehicle values which led to slower depreciation.