Consumer Demand Still ‘Constrained,’ GM Financial CFO Says

During the Citi 2011 North American Credit Conference on Nov. 16, Chris Choate, CFO of GM Financial, talked about some of the goals and strategic planning for the captive and took a look at the current environment for vehicle financing.

Describing consumer demand as relatively “constrained compared to pre-recession levels,” the CFO noted that activity in the subprime auto finance market remains at around 50% of 2006 and 2007 volumes.

He added that credit availability has normalized and is consistent with cyclical expansion of credit risk appetite. “We have really, at this point, retraced the credit tightening that we engaged in in 2008 and throughout 2009,” he said, adding that competition right now is focused on service and pricing. He characterized competition as “rational without any type of race to the bottom,” in terms of underwriting standards.

Improvements in consumer handling of credit and used-vehicle pricing have paved the way for “exceptionally strong” credit performance in today’s market, he said.

So what’s GM’s strategy going forward? The company wants to continue to push forward in the underserved areas like leasing in the U.S. and Canada, as well as providing U.S. subprime and near-prime loans.

Most importantly for Choate is to operate “autonomously in order to maintain credit underwriting and profitability standards,” he said.