Profits were mixed at the Detroit 3’s financing arms in the first quarter. Profits rose solidly at General Motors Financial Co. but fell at Ford Motor Credit Co.
Profits also fell at Santander Consumer USA. Since 2013, the Dallas lender has provided loans and later leases for Fiat Chrysler Automobiles under the Chrysler Capital brand.
Here’s a roundup, with a focus on the lenders’ North American operations.
Santander Consumer USA, of Dallas, stuck with a strategy to pursue higher margins at the cost of sharply lower originations in the first quarter, the lender said.
“What we’re trying to do is maintain a consistent approach, factoring into what we see, what we originate and just making sure that what we get is good, no matter how much of it we get,” CEO Jason Kulas said in a conference call reviewing the company’s first-quarter results.
Net income fell 31 percent to $143 million for the first quarter, while total finance and other interest income eased 0.7 percent to $1.63 billion.
Total auto originations for Santander Consumer were down sharply, off 21 percent from the year-ago quarter to $5.39 billion. That included a decline of 38 percent in loans for Chrysler Capital, to $1.59 billion. Lease origination volume eased 1.1 percent to $1.6 billion.
Changing the mix
Starting with the first quarter of 2016, Santander Consumer has changed the mix of its originations, with a smaller mix of what it considers prime loans, or those to customers with credit scores above 640.
Santander Consumer loans to all customers with a credit score at or above 640 declined to 30 percent of total loan originations from 32 percent a year earlier. Loans representing credit scores of 600 to 640 were flat, at 13 percent of the mix.
Loans to customers with credit scores from 540 to 599 increased to 25 percent of the origination mix, from 22 percent; loans to customers below 540 increased to 18 percent, from 15 percent. Customers with no credit scores accounted for 12 percent, down from 14 percent. Commercial loans accounted for the remainder.
Used vehicles represented 53 percent of Santander Consumer’s originations in the latest quarter, up from 49 percent a year earlier.
GM Financial’s pretax profit grew 16 percent to a first-quarter record $260 million. Net income rose 23 percent to $202 million as net revenue rose 38 percent to $2.9 billion, the Fort Worth, Texas, company said.
General Motors said its financial arm “continued top-line growth as GM Financial executes the transition to a full-captive finance company.”
GM Financial handled 48 percent of GM’s North American retail sales business in the first quarter, up from 37 percent a year earlier, parent General Motors said.
GM Financial’s North American loan originations surged 87 percent to $4.82 billion, while North American GM lease originations fell 6.8 percent to $6.26 billion.
Total loan and lease originations, including those in international markets, rose 18 percent to $12.83 billion.
GM business represented 87 percent of GM Financial’s North American loan and lease originations during the period, down from 89 percent a year earlier.
Retail finance delinquencies more than 30 days overdue, excluding those in repossession, declined to 4.9 percent of GM Financial’s North American portfolio from 6.1 percent a year earlier.
Ford Motor Credit said its pretax profits fell 6.4 percent to $481 million in the first quarter from the year-earlier period, while net income fell 7 percent to $333 million.
Compared with the year-earlier levels, pretax profits were boosted $95 million by higher volumes and a more profitable mix. But that was erased by a reduction of $53 million for lease residuals, including $43 million for supplemental depreciation and $10 million for actual residual losses. Among other factors, $24 million in credit losses, and $26 million for reduced financing margins trimmed pretax profits.
Almost all of Ford Credit’s business is in the Americas, which accounted for $358 million of the $481 million in pretax profit.
Ford Credit’s average U.S. retail placement -- including both loans and leases -- entailed a FICO score of 741, up from 732 a year earlier, while the percentage of its portfolio that was over 60 days delinquent edged up to 0.16 percent from 0.14 percent.
Leases accounted for 24 percent of Ford Credit’s retail sales in the first quarter, down from 26 percent a year earlier.
Ford Credit’s average term for retail placements in the first quarter was 65 months, up from 64 months a year earlier. The company said 4 percent of its retail business had terms of 73 months or more, vs. 2016 figures of 3 percent in the first quarter, 5 percent in the second quarter, 3 percent in the third quarter and 4 percent in the fourth quarter.
James B. Treece contributed to this report.