GM drive to build up captive market share

From next month, General Motors has signalled it intends to steer all of its lease subsidies for the Chevrolet brand to captive finance company GM Financial, instead of sharing them with Ally Financial and US Bank.

The change will take effect April 1. In January this year, the auto manufacturer announced that GM Financial would become its exclusive preferred lender for leases for the Buick-GMC and Cadillac brands, effective February and March 2015, respectively. At the time, GM said the move is intended to drive customer loyalty.

Ally said Chevrolet subvented lease originations accounted for about $4 billion out of Ally’s total of $9.3 billion of GM lease originations in 2014. Ally’s total originations for all of 2014 were $41 billion, of which Buick, GMC, Cadillac, and Chevrolet leases combined accounted for approximately a quarter (23%).

At the time, GM said keeping the vast majority of its leases in-house would give the company more control of its customer data and make it easier to retain customers who were coming off lease.

In a conference call for investors held this week, GM president Dan Ammann said the company expects earnings from GM Financial to more than double by 2018. GM wants pretax earnings for GM Financial to rise from $815 million in 2014 to more than $1.6 billion in 2018.

“As we have stated in the past, growing and positioning GM Financial as a fully capable captive finance company is really key to driving returns across the enterprise, and through the cycle,” Ammann said.

GM Financial grew out of sub-prime lender AmeriCredit Corp., which GM acquired in 2010. While this brand still targets the sub-prime market, in 2014 GM added prime risk loans to its product range, along with commercial loans to dealers.