GM leasing is slow to rev
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General Motors is stuck in second gear in the drive to get leasing back on track.
GM CFO Dan Ammann said in a conference call that GM's U.S. lease penetration was 12.6 percent in the first quarter. That was down from 17.2 percent in the year-ago quarter.
The automaker is counting on GM Financial to provide much of the horsepower, which is why the finance unit has said growth in leasing is a priority -- and this month reiterated that goal.
But in the first quarter, leasing was flat for GM Financial as a percent of its total loans and leases originated in the quarter.
Besides offering lease deals through GM Financial, GM makes subvented lease offers via U.S. Bank and Ally Financial. Ally evolved from the former GMAC, once GM's captive finance arm.
Caitlin DeYoung, GM Financial senior vice president of investor relations, cited these reasons for lower-than-average GM leasing:
-- GM's sales mix doesn't line up well with leasing. GM sells a high percentage of light trucks -- 58 percent in the first quarter, just about flat with 57 percent in the same period a year ago, according to the Automotive News Data Center. Full-sized pickups, for example, are usually bought, not leased.
-- GM is underrepresented in the compact luxury segment in which leasing is above average. GM plans to address that in part by introducing the Cadillac ATS sport sedan, DeYoung said. The ATS is expected to go on sale late this summer.
-- Across the industry, there are fewer returning lease customers as a result of lower lease originations during the credit freeze and recession in 2008 and 2009, DeYoung said. Returning lease customers are predisposed to another lease.
-- GM still has some older models with below-average residuals, such as the Chevrolet Impala, which make it too expensive to support lease incentives. GM unveiled a redesigned Impala for the 2014 model year at last month's New York auto show. Sales are expected to start next spring.
-- GM Financial has been in the lease market in Canada only since April 2010. "It will take time for our programs to develop and gain traction there," DeYoung said.
Getting leasing going was one of the main reasons GM bought the former AmeriCredit in 2010 and converted it to GM Financial.
GM Financial's lease volume increased 23 percent in the first quarter, but since that matched its increase in total loans and leases, the lender's lease share stayed flat at about 22 percent of originations. That was about even with the industry average lease penetration, not counting GM, according to GM's first-quarter results.
You can reach Jim Henry at autonews@crain.com.
