Retention and Loyalty Are GMF Priorities as Lease Provider
Customer retention, loyalty, and efficiency are key goals for General Motors Finance Co., now the sole provider of all Buick and GMC subvented leases, an exclusive agreement that went into effect last week. The captive confirmed the partnership in January 2014, taking over a side of the business it previously shared with Ally Financial Inc. and U.S. Bank.
GMF is well-positioned to handle the extra business, according to Kyle Birch, chief operating officer for North America, who said that the captive has been offering leasing for about four years.
“We’ve had leasing for all spectrums of credit since early 2011,” Birch said. “That’s not new. You just had U.S. Bank and Ally there as well, so that share was split a little differently.”
The prime piece however, was what Birch called the “last piece of the puzzle,” so in March of 2014 GMF provided about 300 floorplan dealers a prime pilot, through which the company got to “work out some of the bugs in the system,” he said.
“What was a big piece of all of this was we had a separate lease and a separate loan operating system,” Birch said. “So what we did was combine those two systems together. Now our underwriters, when a customer goes into a GM store and fills out a credit application, have the capability to give the dealer a lease approval and a loan approval, which is pretty unique.”
The dealer has the flexibility to present the customer with all of their financing options at once, in other words. If a consumer is concerned with ownership, they can opt for the loan, but if their main concern is payments, the dealer now has the ability to present a lease option to them at the same time, according to Birch.
Another benefit of the partnership is the capability to come up with a strategy to work with GM as that customer moves through their lease, get them back to the dealership, and hopefully put them in another GM car. The short of it, he said, is about retention, loyalty, and trying to drive consumers back to GM products.
“When a customer goes into a GM store and picks out a vehicle, the fact that they can be financed with us — we’re part of the family, we have dialogue with the customer through the financial transaction — gives us more customer ownership,” Birch said. “We can market new deals on vehicles, do everything we can from a finance angle, to put that consumer back in a GM car when they come out of their loan or lease. That’s not to say that in a bank environment they wouldn’t do that, there’s just a little bit of a different agenda there.”
Before 2010, when the company was known as AmeriCredit, its specialty was subprime lending, and although leasing is primarily a prime business, the now-full global captive won’t be forgetting its roots.
“GM remains a leader in the nonprime industry, and a lot of it is because of what we do and our background in subprime,” Birch said. “We do a lot of customer welcome calls with nonprime customers, just to confirm the transaction, that everything is heading in the right direction, and they had a good experience.”
For most Americans, he said, the car-buying experience can be a great thing, and you want everybody to get off on the right foot, and make sure to answer questions about their transaction and where to send payments.
GMF’s exclusive partnership with GM extends to only GMC and Buick vehicles for now, but Birch believes that more GM brands will follow, perhaps even by the second quarter.
“I think if you talk to dealers, most of them will tell you that it’s a simpler solution for them,” Birch said. “They’ve got one place to lease, as opposed to two or three different banks.”
