GMF Grows Originations, Lowers Delinquencies

General Motors Financial grew its North American lease originations by 25% in 2016 to $25.1 billion up from $20.1 billion the year prior, the company disclosed in its 4Q earnings report.

In the fourth quarter alone, GMF saw lease originations top $5.8 billion up from $5.3 billion the year before — a 9.4% increase.

The uptick is another signal of just how much off-lease volume is going to increase in the coming years amidst a market of declining used-vehicle prices, AFN has previously reported. GM itself has signaled it is worried about this trend, and plans to funnel off-lease volume into its various mobility service programs, to decrease the supply hitting the market.

“The level of our originations for financing new GM vehicles does depend quite a bit on the extent of GM’s subvented products in the market,” said Dan Berce, president and chief executive of GMF, during a pre-recorded earnings call — during which investor questions were not made available.

Year-end North American loan originations topped $11.5 billion compared to $10.8 billion in 2015, which represents a 5.28% increase. For the three months ending December 31, loan originations grew 5.6% year over year to $3 billion compared to $2.8 billion.

GMF is one of the very few auto lenders reporting a drop in delinquencies 30 to 60 days past due — down to 5.3% of its North American auto portfolio, from 6.3%. Delinquencies greater than 60 days grew by two basis points to 2.2% of the portfolio, from 2%.

While charge-off dollar amounts grew to $149 million in the quarter, up from $132 million the year prior, as a percentage of the overall portfolio the rate actually fell to 2.8%, down from 3%. The same trend can be seen in full-year results. Charge-off dollar amounts grew to $511 million in 2016, up from $420 million in 2015, yet that represented a 1 basis point decrease as a percentage of the overall portfolio — 2.6% down from 2.7%.

“Primarily because of favorable mix — meaning we originated more prime loans — our charge -off rate decreased,” Berce said.