FORT WORTH, Texas – General Motors Financial rolled out its North American vehicle lease program during the second half of 2014 and became the exclusive provider for the parent automaker — assuming captive finance company status — early last year. As a result of those moves, GM Financial determined that leases now make up the largest portion of its earning assets composition, sitting at 38 percent and 9 percent higher than its retail installment contract segment.
So is GM leveraging its captive too much to move new metal via leases? GM Financial chief financial officer Chris Choate addressed that point and more about the OEM’s leasing activity during a special presentation last week.
“I think, and I believe GM would tell you, that leasing has probably gotten to be a higher percentage of their overall sales mix than they would like to see sustained over time. It tends to be a slightly more expensive product for the manufacturer to support in the market,” Choate said in response to the last question posed by Wall Street watchers during a presentation titled “Behind the Charts.”
Choate quickly continued by saying, “Now that comment relates to, that’s a very GM specific comment. Certainly luxury makers are always going to have very high penetration of leasing.”
Experian Automotive revealed through a study released during the National Automobile Dealers Association Convention & Expo back in April that leasing as a financing option for new vehicles has grown 76 percent since the company began publicly tracking the data in 2008.
Additionally, the study determined the upward trend of leasing has resulted in a rising surplus of vehicles coming off lease. In fact, according to the analysis, more than 1.8 million vehicles will come off lease by the end of 2016, looking at projections for April through December.
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