The captive finance unit of General Motors tallied record-high revenue in the second quarter on the strength of its rapidly growing auto portfolio, executives said.
GM Financial CEO Dan Berce credited support from the automaker and a mutual plan to grow the business for a 4.3 percent rise in revenue to $3.64 billion.
As GM Financial increases retail penetration of GM business, its portfolio will continue growing at a notable pace, Berce said in an interview. GM Financial is still working toward building its GM business at the magnitude generally expected of a captive finance company.
The Fort Worth, Texas, lender was formed in 2010 after GM acquired subprime lender AmeriCredit and expanded its business by adding services such as prime and floorplan lending. It also acquired business from Ally Financial, which had been GM's original auto finance arm under the name General Motors Acceptance Corp., before GM gradually sold GMAC to raise money beginning in 2006, three years before its bankruptcy.
"When GM bought us, we had very little penetration of GM sales," Berce said.
About four years ago, Berce said, GM and GM Financial both set a target of a 50 percent market share of the automaker's retail business in the U.S. -- a figure that now is consistently reached.
"Our asset levels reached $98.7 billion at the end of June, and just a few short years ago, they were half of that," he said.
Berce said the company's auto loan business is the fastest-growing area of its portfolio, reaching $42.7 billion in the second quarter. Retail loan originations soared 18 percent to $7.11 billion.
"That's where we've worked pretty closely with GM's sales teams to design incentive programs that are not only effective for sales but to drive business to GMF," Berce said.
Originations of dealership floorplan loans, which auto dealers take out to finance vehicle inventory, have also grown for the captive, now reaching a total outstanding $13 billion. Berce said GM hasn't provided any incentives to earn that business, but encourages dealers to connect with the lender.