GM Financial, a financial services arm of General Motors that offers auto financing through the carmaker’s dealers has reiterated last week its goal of effecting growth in leasing. However, GM’s financial services arm posted a flat growth as a percent of total loans and leases in the first quarter of 2012. Also, GM’s overall lease share suffered a drop for the first three months of 2012.
GM also offers lease deals though U.S. Bank and Ally Financial, the latter having evolved from the former GMAC, which was GM's captive finance arm. According to Caitlin DeYoung, GM Financial senior vice president of investor relations, there are several reasons for lower-than-average GM leasing.
One of these reasons is that that carmaker’s sales mix does not sit well with leasing, since light trucks, including full-size pickups, account for 58 percent of GM’s product lineup in the first quarter of 2012. These full-size pickups are usually bought, not leased.
Another reason is that GM does not offer many vehicles that compete in the compact luxury segment, where leasing is above average. DeYoung said the company will address this weakness in part by introducing the Cadillac ATS sport sedan, which will be rolled out late summer.
Also a reason is that across the auto industry, there are fewer returning lease customers, mainly because lower lease originations during the credit freeze and recession in 2008 and 2009. According to DeYoung, returning lease customers are likely to avail of another lease. Fourth reason is that GM has older models with below-average residuals that make it too costly to support lease incentives.
One of these models is the Chevrolet Impala. The company will roll out the refreshed 2014 Impala next spring. Last reason is that GM Financial is only a two-year newbie in the Canadian lease market, starting only in April 2010. According to DeYoung, it will take time for GM’s programs to develop and gain traction in the country.