Big incentives from General Motors helped GM Financial increase auto loan originations by double digits in the second quarter, even as many dealerships had to temporarily close or limit operations because of the coronavirus pandemic.
GM's captive finance arm said in a statement last week that auto loan originations rose 22 percent from the same period of 2019 to $8.7 billion. Generous incentive programs geared toward prime credit buyers, including 0 percent financing for 84 months and 120-day payment deferrals, drove much of the growth.
"That attracted very strong traffic into the showroom," CEO Dan Berce told Automotive News. Many customers who didn't qualify for the 0-for-84 offer took advantage of other promotions through GM Financial, he said.
GM Financial provided floorplan financing for 30 percent of GM dealers in the quarter, up from 27 percent a year earlier. Floorplan dealers are more likely to finance auto loans through GM Financial, so "the more floorplan dealers we get, the more that benefits our penetration as well," Berce said.
But as the number of new loans climbed, lease originations plunged 46 percent to $3.2 billion in the second quarter. Dealerships in major leasing markets, including Michigan and New York, were closed for much of the period because of the pandemic, and attractive loan offers drew more customers to finance instead of lease.