GM Financial’s lease originations up 14% year over year

GM Financial ’s originations increased in the third quarter as an uptick in leasing volume offset a decline in new retail loans. The captive’s loan and lease originations totaled $14.3 billion, up 3.6% year over year and 5.2% quarter over quarter , according to GM Financial’s earnings presentation today. Loan originations ticked down 1.1% YoY but rose 9.3% QoQ to $9.4 billion, while lease originations jumped 14% YoY to $4.9 billion, down 2% QoQ. GM Financial’s share of General Motors ’ U.S. retail loans landed at 40.7% compared with 38% in Q2 and 44.8% in Q3 2023. Finance share dipped due to available incentives but is on track to meet the captive’s targeted share of 40% to 50%, according to the presentation. “We work with the OEM in terms of targeting penetration. A lot of the penetration results from either leasing or supported or subvented loans,” GM Financial President and Chief Executive Dan Berce said during today’s General Motors earnings call. “Our long-term target is 40% to 45%.” The percentage of GM U.S. retail sales that were leased came in at 16.4% in Q3 compared with 16.6% in Q2 and 15.4% a year prior. The U.S. off-lease return rate increased 14 percentage points YoY and one percentage point QoQ to 24% amid declining used-vehicle values. Outstanding loan and lease receivables inched up 2.5% YoY and 1.7% QoQ to $105.4 billion, according to the presentation. GM Financial was the third largest auto lender by outstandings volume at yearend 2023 with a portfolio of $92.4 billion, according to the latest Big Wheels Rankings data . DQs, losses up Credit performance worsened across GM Financial’s portfolio, with 31- to 60-day delinquencies at 2.3%, up 30 basis points (bps) YoY and 20 bps QoQ, according to the earnings presentation. Delinquencies of 61-plus days ticked up 10 bps YoY and QoQ to 0.8%. Annualized net charge-offs increased 20 bps YoY and QoQ to 1.2%. The captive’s allowance for loan losses sat at a coverage ratio of 3.1%, or $2.3 billion, flat with the ratio in Q2 and Q3 2023. “We did expect a modest moderation in credit year over year, and that's exactly what we're seeing,” Berce said on the call. “Our portfolio is heavily prime, and the prime credits have continued to perform very strong with good employment levels, good household income and a ... strong household balance sheet.” Floorplan outstandings rise 56% On the commercial side, GM Financial’s floorplan outstandings totaled $19 billion, up 55.7% YoY and 11.1% QoQ with 2,523 floorplan dealers, according to the presentation. North America floorplan receivables jumped 61% YoY and 11.5% QoQ to $17.5 billion. The lender’s floorplan finance share for U.S. GM dealers sat at 47.4% in Q3 with 1,976 floorplan dealers compared with 45% with 1,901 dealers in Q3 2023. Meanwhile, GM Financial’s earnings before taxes (EBT) stood at $687 million in Q3, a decline of 7.3% YoY, according to the presentation. EBT is “still tracking in the range of $2.75 billion to $3 billion for the full year,” Paul Jacobson , executive vice president and chief financial officer at General Motors, said during the call. Ending earning assets tallied $124.3 billion, up 8.1% YoY and 2.9% QoQ, driven by retail and commercial loan growth and increased lease volume following a decline in leasing in 2021 and 2022 across the industry, according to the presentation. The lender had $34.3 billion in available liquidity across cash and borrowing capacity in Q3. Shares of General Motors Co. [NYSE: GM] were trading at $ 53.73 as of market close today, up 9.85 % from market open. General Motors has a market capitalization of $ 60.7 billion .

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