GM Financial and Santander Consumer USA, two traditional subprime specialists, are accelerating strategic moves into prime-risk loans and leases in 2015.
“The prime business for GM new and used is a substantial annual run rate [or volume]. We’re going to participate more and more in that,” GM Financial CEO Dan Berce said during a conference call last week.
Berce said GM Financial completed its nationwide rollout of prime loans on Nov. 1. GM Financial originated about $500 million worth of prime-risk loans in North America in 2014, he said, mostly late in the year. At the end of 2013, the lender had just $120 million in outstanding prime-risk auto loans in the United States and Canada.
GM Financial also more than tripled its share of U.S. lease originations for parent company General Motors, to 47 percent of GM leases in the fourth quarter from 15 percent a year earlier. GM Financial leases are overwhelmingly prime, the company said.
Meanwhile, Santander Consumer USA, which is the lender behind Chrysler Capital, reported last week it is moving to a higher mix of new vehicles and prime-risk leases and loans.
“The growth in our originations in 2014 was driven by lease and prime, if you look at just the overall origination growth from 2013 versus 2014,” Jason Kulas, CFO of Santander Consumer USA, said during a conference call on Feb. 3.
The lender provides private-label financing under the Chrysler Capital name for Chrysler, Dodge, Jeep, Ram and Fiat dealers in the U.S. Chrysler Capital was created in May 2013.
Kulas said Santander Consumer USA originated about $2.4 billion in Chrysler Capital retail loans in the fourth quarter, out of a total of $6.1 billion in loans and leases for Santander Consumer USA. More than half of the Chrysler Capital retail loans, $1.4 billion worth, were prime-risk loans; the rest were nonprime, defined as loans to customers with FICO scores below 660. The lender also originated $1.3 billion in Chrysler Capital leases.
Santander Consumer USA and GM Financial continue to originate subprime loans. GM Financial still uses the AmeriCredit brand name to offer subprime loans via non-GM dealers. General Motors bought AmeriCredit in 2010 and transformed it into GM Financial.