GM targets big growth in floorplanning
Goal is 'to push' Ally, finance chief says
 | Berce: “If it takes five years ... so be it.” |
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ORLANDO -- General Motors' finance arm has an ambitious goal: to provide floorplan financing to at least 20 percent of GM dealers, the unit's top executive said.
Since GM Financial introduced commercial lending in April 2012, it has signed up to provide floorplan inventory financing to about 130 GM dealerships. That's about 3 percent of GM's roughly 4,400 stores.
GM Financial CEO Dan Berce said the goal is to give dealers a competitive alternative to Ally Financial, formerly GM-owned GMAC, which provided floorplan financing to 71 percent of GM's dealers in 2012.
"The goal is in no way, shape or form to replace Ally but to push them" to offer more competitive rates, Berce told Automotive News at the National Automobile Dealers Association convention here this month. "If we get 20, 25 percent share ultimately, we're perfectly happy with that. Because then we've got critical mass."
He added: "If it takes five years to get there, so be it."
GM Financial's floorplan push is part of GM's effort to diversify its dealers' options for commercial loans. During the credit crisis four years ago, many dealers had trouble securing loans, especially to finance inventory.
GM created GM Financial in October 2010 through the acquisition of subprime lender AmeriCredit. That has helped GM expand its subprime business, or sales to customers with risky credit, to 7 percent of overall sales in the fourth quarter, from 4 percent in early 2010. The industry average for subprime is around 5 percent, Berce said.
GM Financial has expanded its offerings to include a national leasing program and commercial lending to dealers, including floorplan, mortgages and construction loans. Roughly 25 percent of GM's leases are through GM Financial, Berce said.
In December, Robert Morris III, president of Morris Cadillac-Buick-GMC in North Olmstead, Ohio, near Cleveland, switched his floorplan to GM Financial from Ally, which his store had used for more than a decade.
Morris said the interest rates of the two lenders were comparable. But he said his Ally rate was contingent on meeting monthly thresholds for Ally's other products, such as new- and used-vehicle loans. GM Financial offers a competitive rate "without having to jump through any hoops," Morris said.
"I think the future in terms of the direction that General Motors is headed for -- things like incentives, rates, subvention -- is going to be with the captive, GM Financial," Morris said.
An Ally spokeswoman said: "Ally Financial has proven to be a stable source of wholesale financing for GM dealers for many years" and will "continue to compete by providing outstanding wholesale products and services to meet dealer needs."
You can reach Mike Colias at mcolias@crain.com.
