It has taken four years, but GM Financial is finally offering a full range of products to General Motors dealers, prompting the captive lender's CEO to predict a "tremendous amount of growth" in 2015.
"Over the last four years, we've been building our capabilities in areas like loan, lease and dealer-lending products like floorplanning," CEO Dan Berce told Automotive News. "Now that we have all our capabilities built up, we will be able to grow our finance penetration at a better rate going forward."
GM Financial certainly has room to grow. It financed about 10 percent of all GM new-vehicle loans and leases in the U.S. in the third quarter, Berce said. But a typical captive finance arm's penetration rate would be more than 50 percent, he said.
"We're coming off a very low base of finance penetration for GM Financial into GM sales channels," Berce said. "We expect the industry itself to show new-car [sales] growth in 2015 over 2014 -- and 2014 was a good year -- but we have the added growth trigger of increasing our financial penetration."
General Motors bought GM Financial in October 2010 when it was AmeriCredit, an independent lender that specialized primarily in subprime loans.
"We've spent literally the last four years on our product capability," Berce said. The first thing the lender did after the GM purchase was roll out leases, a new business line for it at the time. Said Berce: "We were able to offer our first lease product within 90 days after GM bought us."
By July 2011, GM Financial offered a spectrum of lease products that covered every consumer demographic. In 2012, it introduced a floorplanning product for dealers "with all the ancillary dealer finance products such as real estate loans and lines of credit," Berce said.
But the former subprime specialist still was just getting up to speed in terms of financing consumers with prime-quality credit. This year, GM Financial rolled out a prime loan on Nov. 1 to all GM dealers and a lease program for business customers in September. The programs are in their infancy but "going well," Berce said.
And he's patient.
"We don't expect the penetration to get from that 10 percent number to 50 percent overnight," he said.
The pace of GM Financial's growth will depend on competition and how other lenders are serving GM, as well as the level of incentives that GM offers at any given time for loans or leases. GM Financial will add a lease program for municipal fleets next year, too.
In September, Standard & Poor's upgraded GM Financial to investment grade. Berce said that will be a catalyst for growth, too.
"If you look at GM Financial today, we have a full suite of products that any other captive would have -- meaning loans from subprime to prime, a full spectrum of leasing and all the dealer finance products," Berce said. "It took us literally four years to get to this point because we had to build out a lot of infrastructure, do a lot of systems work, hire a lot of people and expertise."