FORT WORTH, Texas — GM Financial continued its transformation from specialty finance source to captive finance company in the first quarter, with company officials reporting last week that the firm’s first full quarter as General Motors’ exclusive lease provider went smoothly.
The captive posted net income of $186 million for the quarter ending June 30, up from $175 million in the year-ago quarter. Earning for the first six months of the year were $336 million, up from $320 million one year ago.
Operating lease originations of General Motors vehicles totaled $5.6 billion for the quarter, up from $3 billion in the quarter ending March 31 and up from $1.5 billion one year ago. For the first six months of the year, lease originations totaled $8.6 billion, up from $2.3 billion one year ago.
Consumer loan originations totaled $4.3 billion during the quarter, up from $4.1 billion for the quarter ending March 31 and up from $3.6 billion in the year-ago quarter. In North America, consumer loan originations totaled $2.6 billion, up from $1.6 billion one year ago thanks to a large increase in new-vehicle loans. However, the company’s AmeriCredit business shrank to $700 million in June from $900 million a year ago.
For the first six months of the year, consumer loan originations totaled $8.4 billion, up from $7 billion one year ago. The outstanding balance of consumer finance receivables was $27.3 billion.
Penetration of GM retail sales grew globally, led by an increase in the U.S. market, where penetration rose 9% to 30% year over year. In North America, GM new-vehicle loans and leases accounted for 83.5% of the captive’s originations, up from 66.3% in the year-ago quarter. Including international markets, GM new-vehicle loans and leases accounted for 83.6% of the captive’s originations in the second quarter, up from 74.6% in the year-ago quarter.
The captive also showed higher prime and near-prime origination volume, which totaled $8.2 billion during the quarter — up from $3.1 billion in the year-ago quarter. In North America, prime loan and lease originations accounted for 62.2% of the $5.1 billion originations during the quarter, up from $1.2 billion one year ago. Nearprime accounted for 16.8% of total originations.
Subprime lending grew from $1.5 billion in the year-ago quarter to $1.7 billion, but subprime’s share of total originations shrank to 20.8%. In the year-ago period, subprime loans accounted for 49.1% of total originations.
Underscoring the increase in prime and nearprime lending at GMF, the company’s average FICO score for June 2015 was up about 70 points over year-ago levels.
Credit losses in North America remained flat from a year ago, accounting for 2.3% of average consumer finance receivables. Including its international activity, credit losses accounted for 1.6% of average consumer receivables.
Credit performance in North America was considered steady, with a 59% recovery rate in June — down slightly compared with 62% in the year-ago period. Company officials said they expect recovery rates to gradually decline for the rest of 2015 and into 2016.
Consumer finance receivables 31- to 60-day delinquent were 3.6% of the portfolio during the quarter, up from 3.5% in the year-ago period. Accounts more than 60 days delinquent were 1.6% of the portfolio.
The company also reported that its commercial lending business grew to $3.5 billion and has added 567 dealers in North America.