GM Financial's loan originations plunged 35 percent in the fourth quarter as a new incentive program offered by General Motors got off to a slower start than anticipated. Despite the decline, lease originations and net income rose, and revenue inched up slightly.
In the fourth quarter, loan originations at GM's captive finance company fell to $5.5 billion, while lease originations rose 3 percent to $5.4 billion, the company said in a statement last week.
The rollout of the new GM incentive program drove much of the dip in loan originations, GM Financial CEO Dan Berce said. The traditional incentive offerings, such as down payment assistance, were successful in the first half of the year.
But the automaker launched new incentive programs in the fourth quarter: promotional rate programs designed to retain GM customers and drive business to the captive. The programs lagged as the company worked on dealer training and customer acceptance, but it has gained momentum in the first quarter, Berce said.
GM's mix of incentive programs in the third quarter also drove down the captive's originations.
Fourth-quarter net income increased 19 percent to $377 million and revenue rose 1 percent to $3.6 billion.
Full-year loan originations fell 4 percent to $25.2 billion while lease originations dipped 1 percent to $22.4 billion.
Net income was flat at $1.6 billion and revenue rose 3.8 percent to $14.6 billion.