The strength of GM Financial has been a bright spot for General Motors during the coronavirus crisis. GM's captive has enough liquidity to stand largely on its own, the ability to defer existing customers' loan payments and the power to attract new buyers with generous financing incentives.
At the end of the first quarter, GM Financial had $24.9 billion in liquidity, which would cover at least six months of net cash needs without tapping capital markets or GM, CEO Dan Berce said. Under its support agreement with GM, the lender has a $2 billion cushion before it would need any additional capital from the automaker.
GM expects 2020 credit losses to range from 2 to 2.5 percent and for used-car values to decline 7 to 10 percent industrywide.
"We could experience double that credit loss expectation and double that decline in used-car values, and it wouldn't eat up the whole $2 billion capital cushion. And GM wouldn't have to pay capital," Berce said.
In March, the captive paid GM a $400 million dividend. It plans to pay another $400 million later this year.
In the first quarter, the captive's net income fell 38 percent, to $167 million, while revenue dipped only 1.6 percent, to $3.6 billion. Loan originations fell 9.3 percent, to $6.5 billion, and lease originations dropped 3.3 percent, to $5 billion.