GM Financial positions to grow leasing penetration

Captive lender General Motors Financial Company saw net income drop by almost half in the final quarter of 2014, as the company positioned itself to make major inroads in the leasing market this year.

GM Financial announced earnings of $59 million for the quarter ended December 31, 2014, compared to $121 million for same period in 2013. Earnings for the year ended December 31, 2014 were $537 million, compared to $566 million for the previous year.

The company said earnings had been impacted by $13 million and $42 million in pre-tax acquisition and integration expenses for the quarter and year ended December 31, 2013, respectively. Additionally, earnings for the quarter also included $15 million in pre-tax charges associated with discontinuing the Chevrolet brand in Europe.

Consumer loan originations for the year were $15.1 billion, compared to $9.6 billion for the year ended December 31, 2013. Operating lease originations of GM vehicles were $2.1 billion for the quarter ended December 31, 2014, compared to $650 million for the same quarter in 2013. Operating lease originations for the year ended December 31, 2014 were $6.2 billion, compared to $2.8 billion for the year ended December 31, 2013.

GM lease originations in North America were at $2.07 billion in Q4, up from $1.74 billion in the previous quarter and up from $650 million during the same period a year ago. The total lease portfolio in North America now stands at $7 billion. The company attributed the growth in 2014 to broader, more competitive product offerings and improved dealer acceptance.

GM Financial has now finished its acquisition of all Ally Financial’s auto finance and financial services operations worldwide. In a call with analysts to discuss the financial results, GM Financial CEO Dan Berce said: “Our business is increasingly becoming GM-centric. We believe from a service level standpoint we’re completely ready for lease exclusivity in 2015,” he said. “And this gradual ramp in 2014 of our penetration was certainly indicative of our readiness.”

He said GM Financial originated 47% of GM’s US retail leases in the fourth quarter, worth $1.8 billion, up from 15.2% or $383 million a year ago. Including loans and leases, GM accounted for 67% of GM Financial originations for the quarter, up from 45% a year ago, the company said in a statement.