Dealers applaud GM Financial's ongoing buildup to full captive

GM dealers expect the company's lease incentives for Chevrolet eventually to be steered to GM Financial, following similar moves at GMC/Buick and Cadillac. Photo credit: DAVID PHILLIPS

General Motors’ move last week to steer all Cadillac and GMC/Buick lease incentive money to GM Financial as part of the captive’s ongoing buildup was welcome news for dealers, Cadillac dealer Howard Drake says.

The absence of a true captive finance company has been a competitive handicap for GM dealers, especially in leasing, said Drake, co-chairman of the Cadillac National Dealer Council and owner of Casa de Cadillac in Sherman Oaks, Calif.

“It was the first thing and the last thing we heard from the dealers at every meeting,” he told Automotive News.

On balance, Drake said, dealers had been “very, very happy” with General Motors’ former captive, GMAC, which was already semi-independent at the time of GM’s bankruptcy restructuring in 2009. GMAC was later renamed Ally Financial Inc., but GM retained a minority share until December 2013.

In 2010 GM bought subprime auto lender AmeriCredit and revamped it into GM Financial in part to create an in-house finance source for leases. Since then, GM Financial has also added commercial lending for dealers and prime-risk loans.


Drake said dealers have complained that, without a captive, other lenders weren’t as aggressive about leasing. He also said that with outside lenders, it’s more difficult to coordinate lease pull-ahead programs aimed at getting customers out of their leases early and into a new vehicle.

GM’s plan to steer all Buick-GMC and Cadillac lease incentives to GM Financial means that Ally and U.S. Bank, of Minneapolis, will no longer share in those programs. The Buick and GMC lease subsidies will move to GM Financial on Feb. 3 and the Cadillac lease subsidies sometime in March. In letters to dealers, GM said it was making the change in response to dealer feedback.

Drake, who co-chairs a GM Financial dealer council, said dealers expect lease incentives for Chevrolet eventually to go the same way.

“I think because Chevrolet is so much more volume, somewhere in the midterm future we’ll see Chevrolet,” he said. “They just want to make sure GM Financial can handle the volume.”


Ally is still an important preferred lender for GM dealerships, Drake points out. “It’s not like all of a sudden it’s war between Ally and GM Financial,” he said. “Are they competitors? Yes.”

According to Ally’s financial report for the third quarter of 2014, including both loans and leases, the company financed 29 percent of GM’s U.S. new-vehicle volume in the first nine months of 2014, equal to what it financed in the 2013 period. Ally’s share of GM’s U.S. new-vehicle volume in the third quarter was 31 percent, up from 28 percent in the 2013 period. Ally said it originated $2.4 billion in U.S. consumer leases for GM in the third quarter, down from $2.5 billion a year ago.

GM reported its third-quarter lease penetration was 22.3 percent of new-vehicle volume versus 25.6 percent for the rest of the U.S. industry, not counting GM.


Drake said he expects that Ally, without manufacturer incentives for some GM brands, will make changes to sales targets for its Ally Dealer Rewards program to avoid penalizing dealers for lower Ally lease penetration.

Ally spokeswoman Gina Proia addressed the issue in an email to Automotive News on Monday, writing: “We understand that the landscape is changing in the GM channel, and you can anticipate that we will evolve the ADR program to ensure it remains compelling for dealers that are committed to doing business with Ally.”

You can reach Jim Henry at

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