The chaos the coronavirus unleashed on the U.S. economy and the retail environment allowed GM Financial to prove itself to dealership partners and its automaker parent.
A key pillar of the captive value is support in all economic cycles. As a relatively new captive, GM Financial hadn't had a chance to showcase that, said Jonas Hollandsworth, COO of North America for GM Financial.
"If you think back to when we were acquired and why we were acquired, it was for that very reason," he said.
GM purchased subprime lender AmeriCredit in 2010 and turned it into GM Financial.
Since then, GM Financial has been working to return a profit to GM and recruit more dealers to its portfolio, attempting to lure dealers away from its original captive, GMAC — now Ally Financial. Pandemic conditions and the measures GM undertook to preserve sales and dealership profitability gave its captive a boost in these key areas.
The captive is still working to grow its market share in retail and floorplan origination, though the goodwill and strong incentives during the height of the crisis went a long way to displacing Ally as the true captive and primary source of floorplan financing for GM dealers.
"We were able to fully, we believe, deliver on the value proposition, not only for floorplan dealers, but for non-floorplan dealers as well," Hollandsworth said. "And some of that has stuck and continues to benefit us as we look to grow our retail penetration as well as our floorplan penetration."
The captive acts as a bridge between the automaker and the dealer, but in many ways it's important to distinguish the captive as a business wholly owned by the manufacturer.
When Nissan Motor Acceptance Corp. interacts with consumers and franchised dealers, "We are the OEM," said CEO Kevin Cullum. "All the revenue we generate stays with the motor company and the brand to help support new-product launches and support new retail sales."