General Motors’ US leasing penetration up thanks to GM Financial

Article by Anita Panait, on August 10, 2012

In an effort to bring its leasing operations closer to the industry average, General Motors is using new cars, special promotions and a newly acquired captive finance company. For details, GM’s Cadillac brand is rolling out its XTS sedan and ATS compact this summer and its Buick brand is promoting its "Buick Experience" 24-month lease program while captive finance company GM Financial increases its lease business.

According to GM chief executive Dan Akerson, GM Financial has been a great acquisition for the company, as it has led to incremental volume for the carmaker. GM acquired AmeriCredit Corp., a company that specializes in subprime auto loans, in 2010 and then renamed it as GM Financial.

Under GM’s wings, the lending firm has added leasing, dealer commercial lending, incentivized new-car lending and floorplanning to its offerings. GM Financial launched its nationwide leasing last year, following a state-by-state rollout. In the second quarter of 2012, GM Financial almost doubled its lease business as a percentage of total originations to 21 percent, compared with 11 percent in the second quarter of 2011.

GM Financial chief executive Dan Berce disclosed that subprime customers account for around a third of the lender’s US lease customers for the second quarter of 2012, adding that subprime leases represent incremental business for GM. Aside from GM Financial, the carmaker also makes offers through Ally Financial and U.S. Bank.

GM hiked its US lease penetration a bit in the second quarter of 2012, to 15.3 percent of retail deliveries, from 13.5 percent in the same period in 2011. However, GM’s lease penetration figures were still below average for the US industry, which, excluding the carmaker’s, were around 21 percent for the second quarter of 2012.

Jim Cain, GM spokesman divulged last week that the carmaker expects its new Cadillac models and the Buick Experience program to push GM closer to the industry average. The XTS went on sale in June while the ATS will be rolled out this month. Buick Experience leases began in March.

Topics: gm, leasing

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