FORT WORTH, Texas -- GM Financial is making strides, COO Kyle Birch says. It now provides services for customers across the full credit spectrum, not just nonprime. And this year it accomplished its goal of becoming the exclusive lease provider for all General Motors brands. Now the captive is focused on increasing its loan business.
Birch, 55, spoke with Staff Reporter Hannah Lutz last month at GM Financial's headquarters here.
Q: What was GM Financial's big-gest accomplishment this year?
A: The first quarter through the start of April was our evolution to lease exclusivity. We took on Buick-GMC the first of February, followed by Cadillac the first of March and then concluded with Chevrolet in April. There were a lot of expectations. We were going to be the sole lease providers for GM dealerships for all brands. Execution of turnaround times, approval rates and accessibility to our people, from a customer-service perspective with the dealers, was all on the line for us. Our teams did a great job.
What are your goals for 2016?
When we go into January, we will truly have a full suite of captive products. It's just a matter of continuing to do what we do well, trying to develop programs and opportunities to increase our loan business. The commercial business will increase naturally as we earn a reputation in the business and get more opportunity with dealers. On the origination side, it's continuing with the products we have and trying to gain market share.
What portfolio changes do you expect in 2016?
We're obviously putting on a lot more leases, a lot more loans. We'll probably be around 900,000-plus customers, both loan and lease, this year. That's a big increase in our portfolio. We want to make sure we're able to service it correctly.
We now have customers across the credit spectrum, not just nonprime. On the loan side we'll buy subprime, near prime and prime. For leasing, the same. The lease business will come our way because we are the sole lease provider for GM. But in the loan business, about 70 percent is considered standard, which doesn't have subvention, and about 30 percent is subvented. When you're in a favorable rate environment like today, your standard business is heavier. And because you've got banks competing for that business, your captive is competing for that business.
There are more opportunities for dealers to give customers what they want, whether it's low rate, longer term, a higher loan-to-value or having a back-end product on the deal. No single lender has the answer to all those. We're competitive, and we'll grow our share the remainder of this year and into '16.
How will you adjust your business to satisfy consumers?
A lot of customers don't like talking to a person to resolve their issues; they want to do it online. We've implemented a program called Voice of the Customer where we get feedback from the customer at the boarding of the loan, about the halfway point through the loan and then toward the end of loan. We are continuing to work on that product to find out as we get feedback from consumers where we need to reach out to customers more throughout the life of the loan or lease. That's a big focus for us, improving our customer-service platform.
Are high lease levels a concern?
As long as we manage the risk and we work with GM on the residual values and making sure that they're assessed fairly and continue to work with them as vehicles gain better reputations in quality, value will go up. It's a good market right now. Credit is good. Our lease portfolio performs exceptionally well. The auction market is strong, and we expect it to continue to be strong into '16. No one has a perfect crystal ball and can predict three or four years from now, but that's why you work with your partners on the residual side to make sure you're fairly assessing what that risk would be on a per-vehicle basis.
Is the lending market healthy?
Some people say auto lending is becoming a little irrational, but I don't know that's the right word. Most [lenders] in the space right now, especially full spectrum, are good lenders that came out of the 2008 crisis, and that's fresh on their minds. They're managing within their risk guidance and they've got programs that are helping dealers. It's a very competitive environment. I don't think it's irrational.
Different companies have different strategies. GM Financial has great relationships with the credit bureaus and companies that offer products to help with risk mitigation and also help us get a more educated decision back to our dealers quickly. That's a key piece of it.