General Motors Financial and connected mobility services are expected to drive $2 billion in operating profit for its parent company by 2019, Chief Financial Officer Chuck Stevens said at the Goldman Sachs Industrials Conference Thursday.
That $2 billion is expected to represent 20% of the company’s overall profit, and is indicative of how the company is planning to move beyond vehicle sales and bolster alternative sources of revenue — especially as it prepares for a cyclical downturn.
GM Financial is still looking to grow into “full captive scale,” and expects to get there by growing its floor plan above its current 15% penetration levels, Chris Choate, GM Financial’s chief financial officer, said during the conference presentation. He also expects leasing volumes to remain steady at $6 billion a quarter, but is aiming to slowly grow the company’s share of retail loans.
“We have been very prudent and disciplined in our origination practices. We are not going out and trying to buy share,” Choate said. “We could, with GM’s assistance, grow this business faster. We could look to more aggressively take share away from Ally and other lenders in the market, but we’re just taking it bite by bite, growing very disciplined, not looking to be uneconomic in how we underwrite loans, or how we price the loans that we put on the books.”
Although Stevens said he doesn’t expect a recession in the “foreseeable future,” he recognizes that the business must operate as if there will be one, as the economy approaches the downside of the cycle. Vehicle volume in that scenario, he expects, would decline by 25%, and a lot of the slack is expected to be picked up in gains from GMF and the company’s mobility services arm, Maven.
The Captive also announced a new partnership this week between Maven and Uber, which will allow consumers to lease a vehicle for a week at a time, in order to drive for the rideshare platform. A similar deal was penned with Lyft earlier this year.
