LAS VEGAS — General Motors Financial Co. has sustained double-digit year-over-year loan and lease growth this year, however, depreciating used-vehicle values will create headwinds moving forward, said President and Chief Executive Dan Berce.
“Our key goal for GMF is to survive the residual value onslaught as supply is going to keep through until 2019,” Berce said at the 2017 Auto Finance Summit. “It used to be that credit risk was the thing that kept us up most at night, and now it’s [residual value risk].”
The accelerated depreciation has been driven by a record number of off-lease vehicles coming back to the market, and GMF has been, and continues to be, a big contributor to that pool of cars.
In 2015, GMF was just kicking off its leasing push after General Motors Co. ended its subvented leasing program with Ally Financial Inc. That year, GMF increased its lease portfolio to $20.1 billion in originations — a 228% increase over full-year 2014, according to public earnings records. Assuming a three-year lease term, all that volume will be coming back to the market in 2018.
GMF hasn’t slowed its lease ambitions much since then either, boasting $19.5 billion in lease originations through September —– a 1.3% gain compared with the same period the year prior. In part, the captive hopes to upgrade its systems to better deal with the volume.
“We’re still a little handicapped in that if a customer has a loan and their spouse has a lease, our systems don’t talk to each other,” Berce said. “We really need to get our systems on the same page so that our customer experience can be that much better.”
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