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Podcast: ‘Weekly Wrap’ on GM Financial, CAC earnings
Listen as AFN editors break down top stories from the past week
Earnings season continued last week with GM Financial and Credit Acceptance Corp. reporting a rise in originations and worsened consumer credit performance.
Lease penetration grew for GM Financial in the fourth quarter as the captive tallied a 22% year-over-year increase in lease originations to $4.3 billion. The captive’s loan originations were flat YoY at $8.3 billion.
Credit performance on GM Financial’s portfolio declined but remained below historical levels. Accounts 30 to 60 days delinquent clocked in at 2.3%, up 20 basis points (bps) YoY, and accounts 90 days past due sat at 0.8%, up 10 bps YoY.
Meanwhile, Credit Acceptance Corp.’s consumer loan assignments — or originations — increased 26.7% YoY on a unit volume basis to 78,652 contracts. The lender set a company record for outstandings as adjusted loan receivables increased 14.6% YoY to $7.8 billion.
CAC is focused on its goal as a “growth company” and on tapping into the lender’s large dealer base and sales force, Chief Executive Ken Booth previously told Auto Finance News.
In this episode of the “Weekly Wrap,” Auto Finance News Deputy Editor Amanda Harris breaks down the top stories for the week ended Feb. 2, and what’s in store for the week ahead.
Subscribe to “The Roadmap Podcast” on iTunes or Spotify, or download the episode.
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Transcript:
Editor’s note: This transcript has been generated by software and is being presented as is. Some transcription errors may remain.
Amanda Harris Hello everyone, and welcome to The Roadmap from Auto Finance News, since 1996 the nation’s leading newsletter on automotive lending and leasing. It is Monday, Feb. 5, and I’m Amanda Harris. This is our weekly wrap on what happened in auto finance for the week ending Feb. 2, 2024.
In economic news, The Federal Reserve held interest rates steady for the fourth straight meeting and signaled its openness to cutting them, though not necessarily right away. The decision to leave the target range for the benchmark federal funds rate unchanged at a 22-year-high of 5.25% to 5.5% was unanimous. While officials said employment and inflation goals are moving in positive directions, rates will not be dropped until there is more confidence in inflation moving sustainably toward 2%.
In powersports, manufacturer Polaris increased promotional activity in the fourth quarter amid heavy discounting by competitors as inventory has recovered while North American sales increased. Polaris offered more promotions to compete with competitors discounting 2023 models in Q4. As a result, North American retail unit sales increased 7% year over year, driven by utility and snow units.
In auto finance, GM Financial and Credit Acceptance Corp reported fourth-quarter earnings.
GM Financial saw an improved lease penetration rate which led to increased lease originations. U.S. retail sales that were leased rose to 16.2% compared with 13.9% in Q4 2022 and Lease originations increased 22% year over year to $4.3 billion.
Loan originations clocked in at $8.3 billion, flat YoY. Total consumer originations landed at $12.6 billion in Q4, down 9% sequentially but up 6.6% YoY. Loan and lease outstandings came in at $103.3 billion, flat compared with Q3 and up 5.4% YoY.
Credit Acceptance Corp. tallied a rise in originations for the seventh consecutive quarter as compressed margins and stricter access to capital prompted other lenders to scale back auto loan production. Consumer loan assignments — or originations — came in just above 78,600 contracts in the fourth quarter, an increase of 26.7% year over year on a unit volume basis and up 21.3% on a dollar basis.
CAC’s outstandings set a record for the company during the quarter, Chief Executive Ken Booth told Auto Finance News.
The lender’s adjusted loan receivables — or outstandings — clocked in at $7.8 billion at the end of the quarter, up 3.1% sequentially and 14.6% YoY, according to the release. Group 1 Automotive kicked off retailer earnings last week with an increase in finance and insurance profits. The retailer’s finance and insurance (F&I) revenue came in at $187.1 million in Q4, increasing 8.3% year over year, according to the company’s earnings release. F&I gross profit per retail unit sold (GP PRU) remained flat YoY at $2,068.
However, finance penetration in the retailer’s US stores ticked down to 68% in 2023, down compared with 70% in 2022.
This past weekend, I also attended the National Automotive Dealers Association conference in Las Vegas. Talks spanned F&I profitability, affordability concerns, refinance and leasing upticks, digital retailing, and risk management. Stay tuned as we share coverage from the show this week. That about does it for today’s episode. Thanks for joining us on the roadmap and be sure to follow us on X, formerly known as Twitter, and LinkedIn. We will see you online at autofinance news.net and here next time.
In economic news, The Federal Reserve held interest rates steady for the fourth straight meeting and signaled its openness to cutting them, though not necessarily right away. The decision to leave the target range for the benchmark federal funds rate unchanged at a 22-year-high of 5.25% to 5.5% was unanimous. While officials said employment and inflation goals are moving in positive directions, rates will not be dropped until there is more confidence in inflation moving sustainably toward 2%.
In powersports, manufacturer Polaris increased promotional activity in the fourth quarter amid heavy discounting by competitors as inventory has recovered while North American sales increased. Polaris offered more promotions to compete with competitors discounting 2023 models in Q4. As a result, North American retail unit sales increased 7% year over year, driven by utility and snow units.
In auto finance, GM Financial and Credit Acceptance Corp reported fourth-quarter earnings.
GM Financial saw an improved lease penetration rate which led to increased lease originations. U.S. retail sales that were leased rose to 16.2% compared with 13.9% in Q4 2022 and Lease originations increased 22% year over year to $4.3 billion.
Loan originations clocked in at $8.3 billion, flat YoY. Total consumer originations landed at $12.6 billion in Q4, down 9% sequentially but up 6.6% YoY. Loan and lease outstandings came in at $103.3 billion, flat compared with Q3 and up 5.4% YoY.
Credit Acceptance Corp. tallied a rise in originations for the seventh consecutive quarter as compressed margins and stricter access to capital prompted other lenders to scale back auto loan production. Consumer loan assignments — or originations — came in just above 78,600 contracts in the fourth quarter, an increase of 26.7% year over year on a unit volume basis and up 21.3% on a dollar basis.
CAC’s outstandings set a record for the company during the quarter, Chief Executive Ken Booth told Auto Finance News.
The lender’s adjusted loan receivables — or outstandings — clocked in at $7.8 billion at the end of the quarter, up 3.1% sequentially and 14.6% YoY, according to the release. Group 1 Automotive kicked off retailer earnings last week with an increase in finance and insurance profits. The retailer’s finance and insurance (F&I) revenue came in at $187.1 million in Q4, increasing 8.3% year over year, according to the company’s earnings release. F&I gross profit per retail unit sold (GP PRU) remained flat YoY at $2,068.
However, finance penetration in the retailer’s US stores ticked down to 68% in 2023, down compared with 70% in 2022.
This past weekend, I also attended the National Automotive Dealers Association conference in Las Vegas. Talks spanned F&I profitability, affordability concerns, refinance and leasing upticks, digital retailing, and risk management. Stay tuned as we share coverage from the show this week. That about does it for today’s episode. Thanks for joining us on the roadmap and be sure to follow us on X, formerly known as Twitter, and LinkedIn. We will see you online at autofinance news.net and here next time.
