RoadVantage recently introduced what the F&I program provider called a “powerful and innovative” program for lease customers called Preferred LeaseCare.
The company explained this new concept combines the “as you drive” benefits of RoadVantage ancillary products with a lease-end benefit, possibly saving the lessee thousands of dollars through the lease term.
Preferred LeaseCare offers dent and ding repair with a $1,000 hail deductible benefit, windshield repair, interior/exterior repair and key replacement during the term of the lease — all with no aggregate limits. This program adds an additional lease-end benefit of up to $2,000 with no single event limit, covering items for excess wear such as worn tires and wheels, exterior scuffs, bumpers, missing parts and much more.
“We believe this product is a game changer for lease customers because this program allows a consumer to keep their vehicle in the great condition they desire while they drive and offers a great lease end benefit. Innovation is the engine of our success and offering a ‘Better Customer Experience’ is our passion. RoadVantage chief executive officer Garret Lacour said
As the fastest growing provider of F&I programs, this new offering is just another example of how and why,” Lacour added.
Preferred LeaseCare is now offered to agents and dealers in most states across the country. Learn more about it at www.roadvantage.com.
Loan Portfolio Servicing (LPS) this week announced the latest expansion of the company’s rideshare portfolio servicing platform, making LPS one of the biggest and most experienced rideshare servicers in the nation.
Most recently, LPS was retained to service 7,000 rideshare leases belonging to two different rideshare leasing companies. Prior to those partnerships, LPS helped Uber bring its Xchange leasing program to fruition and serviced more than 30,000 short-term leases through the spring of this year.
“Three years ago, this type of short-term lease product was practically non-existent. But the surging popularity of ridesharing — especially among millennials — has contributed to the need for flexible lease programs,” said Scott France, executive vice president of strategic initiatives for Innovate Auto Finance and president of LPS.
“From the beginning, flexibility has been one of our core values,” France continued. “We seek to understand what our clients are trying to accomplish and develop strategies that support their vision.
“For example, when Uber approached our company to service their upstart rideshare program, we needed to modify almost all of our processes to accommodate short-term, high-touch leases,” he went on to say. “We recognized a well-timed opportunity to service these portfolios, and our company has invested significant resources toward scaling our infrastructure to support this underserved niche.”
France emphasized the expertise needed to successfully service rideshare portfolios.
“They are not your average leases. We have to manage vehicle maintenance, taxes, tolls, title issues, registrations, citations and excess mileage with a frequency much higher than that of a typical lease,” he said. “All in all, rideshare portfolios behave much more like rental car portfolios and require a specialized servicing infrastructure.”
LPS has serviced high-touch rideshare portfolios for the past three years. In addition to modifying its processes and procedures, the company has invested in technology that is essential to providing quality service on this type of product.
“It’s fun and exciting to participate in the evolution of the automotive finance and lease arena,” France said. “We are at the forefront of developing viable servicing solutions that support such dynamic financing alternatives. We are always interested in what is next.”
France will speak at Used Car Week beginning on Nov. 13 in Palm Springs, Calif., on how to maximize returns and minimize losses from auto finance and lease portfolios in light of today’s changing markets.
For more information about LPS / Innovate’s services, contact France at scott.france@innovateauto.com or (817) 471-1182.
MUSA Auto Finance, a company specializing in new and pre-owned vehicle leasing, launched its online portal on Thursday where dealers can submit applications, receive decisions and print pre-populated lease contracts.
MUSA Auto Finance highlighted this portal can automate a typically complicated process in an effort to enable “truly effortless” leasing.
“In an environment where loan terms continue to escalate, customers are being taken out of the market for far too long. That’s why I believe leasing has drawn so much attention over the past couple of years,” MUSA Auto Finance chief executive officer Jeff Morgan said.
“The problem is the standard leasing process is confusing and time-consuming for dealers. It’s so difficult that many dealers don’t even want to consider doing a lease. But our automated leasing program will change that,” Morgan continued.
Dealers can send MUSA the customer and vehicle info, agreed-upon vehicle price, and down payment through Dealerrack, RouteOne or the MUSA portal. Then, MUSA structures the lease.
With one click of a button in the proprietary dealer portal, dealers can print the completed lease agreement and other documents needed to finalize the funding package.
“When we started this company, our mission was to modernize auto leasing so dealers no longer need to worry with complicated worksheets, tedious deal structuring and kicked contracts,” MUSA Auto Finance president Richard Frunzi said. “Leveraging this kind of automation for leasing is unheard of in the industry today — and especially for both new and used cars."
MUSA Auto Finance is now doing business in 29 states, with representatives already on the ground in Alabama, California, Florida, Georgia, Illinois, Missouri, Texas and Washington. The company is also signing up dealers in Arizona, Arkansas, Delaware, Idaho, Indiana, Kansas, Kentucky, Michigan, Minnesota, Mississippi, Montana, Nebraska, New Jersey, New Mexico, North Carolina, Oregon, Pennsylvania, South Carolina, Tennessee, Utah and Virginia.
MUSA recently secured $175 million in funding capacity through a warehouse facility with Goldman Sachs and a capital investment from Crestline Investors. This funding will enable MUSA to launch its auto leasing program nationwide, as well as implement future enhancements to its online portal.
To learn more about MUSA’s leasing program, visit www.musaautofinance.com and click on the dealers tab.
GrooveCar recently highlighted that its auto leasing program for credit unions, CU Xpress Lease, produced a 39-percent year-over-year volume increase during the first quarter.
The growth comes after CU Xpress Lease funded nearly $1 billion in lease volume for 2016.
The first quarter will break vehicle leasing records for credit unions, according to Callahan & Associates, which added that these institutions are experiencing the fastest 12-month share growth rate in 14 years and the third year of double-digit growth.
The firm added that credit unions nationally witnessed new and used auto finance portfolio growth, up by 34.6 percent in Q1, compared to the same span in 2016.
A GrooveCar partner, Teachers Federal Credit Union, headquartered on Long Island with assets of $5 billion, is exceeding the national trend, reporting lease volumes have increased significantly in the last year. In 2016, auto lease volumes were up by 33 percent versus 2015 numbers; in 2017 Q1 volume is up 85 percent.
The success, according to Teachers, is driven by lower money factor rates coupled with competitive residual values.
“Long Island credit unions are making an impact and are now taking business away from captive lenders and banks. This is a profit changer. CU Xpress Lease offers credit unions a means to be competitive at all stages of the auto buying process,” said Frank Rinaudo, senior vice president of GrooveCar’s CU Xpress Lease.
Regional growth for the program is attributed to continued popularity of leasing versus traditional financing. The program continues to drive volume for credit unions and increased sales for Long Island auto dealerships where 90 percent of the franchised dealerships participate in the GrooveCar program.
“We are thrilled to provide a leasing solution where credit unions and our preferred dealers, here on Long Island, can do some serious business together,” Rinaudo said.
Francis Collins, senior vice president of credit, Teachers Federal Credit Union, also located in Hauppauge, N.Y., agreed.
“The leasing program has been a main driver behind our significant auto loan growth in 2016 and now into 2017. Members are benefiting from the program through low rates and great service at origination and lease termination,” Collins said.
The CU Xpress Lease program can provide a solution for credit unions and their members to participate in leasing on Long Island. Providing a program for consumers allows credit unions and dealerships to do more business together, given nearly 70 percent of all new vehicles sold are through the lease channel.
Robert Kravetz, general sales manager for Huntington Jeep Chrysler Dodge, located on Long Island, reports at his dealership the number of leases is actually higher.
“We are seeing 75 percent to 85 percent of our business through leasing. Of that number, 70 percent of all leases are going through credit unions because the programs work well for the consumer and the dealership,” Kravetz said.
Officials say the Long Island market offers perfect demographics for auto lease growth. There is a strong employment market for a range of age groups who prefer this method of financing.
“We are seeing members of all ages partaking in leasing, many of whom are taking out their second and third lease with TFCU,” Collins said.
Auto leasing relies on residual values of the vehicle; predicting what the car is going to be worth at the termination of the lease.
“Offering low mileage leases, the CUXL program provides flexible mileage options as low as 7,500 miles a year; this keeps the values high,” Rinaudo said, “The combination of the two allows us to provide great lease specials through the credit unions for area dealerships to attract customers. It’s a great situation for both parties.”
In addition to Long Island, GrooveCar’s CU Xpress Lease is a national program that serves credit unions throughout the nation, with sales representatives and support staff to assist credit unions in managing all aspects of the program. The program has been in operation for over a decade with many lease cycles that have made credit unions on the program 100 percent whole when each cycle ends.
To help generate even more business, GrooveCar will be exhibiting at the Las Vegas CUNA ACUC conference beginning on June 25 to promote CU Xpress Lease
The theme of the 2017 conference will be “Discover,” focusing on the future of the credit union movement. The event explores trends that are reshaping the industry and will fuel growth through new ways of thinking.
“This is a very exciting time in the credit union industry; CUNA’s ACUC is taking the lead on promoting the need to stay ahead of trends. When credit unions are provided the right tools, the world opens to new opportunities,” said Robert O’Hara, vice president of strategic alliances at GrooveCar.
O’Hara explained that reaching members through innovation is part of the forward-thinking programs available at GrooveCar.
“As banks begin to get into online car buying, the GrooveCar resource has been ahead of this trend, with years of providing a car shopping experience to members and at the same time offering an auto lease program,” he said.
“Our leasing program makes credit unions competitive 100 percent of the time during the buying process. Credit unions are remaining relevant at every buying stage and staying competitive on many fronts; now is the time to solidify your position with members and strategic partners for the future,” O’Hara went on to say..
Credit unions will be able to experience first-hand the lead generation features built into the platform while at the show, through live demonstrations. Users of the platform can witness how the program is designed to acknowledge when members are performing different tasks during their vehicle-buying journey.
O’Hara added engagement with members is just one of the features that will really stand out for first-time users.
“We continue to provide a seamless digital experience; whether it’s from a stationary computer or on the go from a mobile device, it’s meeting the member where they are, with what they need,” O’Hara said.
Westlake Financial Services now possesses a significantly larger investment footprint, as on Thursday the company announced the acquisition of Credit Union Leasing of America (CULA), headquartered in San Diego.
The company highlighted the purchase of CULA raised Westlake’s total managed assets from $4.0 billion to $5.5 billion.
Founded by Terry Bowdler nearly 30 years ago, officials highlighted CULA is a respected automobile lessor in the credit union market. Westlake’s investment will support the continued growth of CULA by providing additional resources and financial stability.
“Along with its subsidiaries, Westlake Financial offers indirect financing, dealer floorplan financing, direct-to-consumer lending and insurance products. CULA‘s lease model complements Westlake’s offerings,” said Don Hankey, chairman of Westlake Financial Services. “In addition, CULA’s current affiliations strengthen our growing relationships within the credit union industry.”
Westlake Financial appointed Ken Sopp — who was vice president of Midway Leasing, a Hankey Group subsidiary — as chairman and managing general partner of CULA. The company also noted John Thomas will remain CEO of CULA, and Bowdler will transition to a strategic advisor role.
Officials added Credit Union Leasing of America will remain headquartered in San Diego.
“Our credit union clients, my talented team and our extended family of service providers have been my life for the past 29 years,” Bowdler said.
“As I transition to an advisory role for CULA, I am confident that the company is in great hands with Westlake Financial,” he continued. “The leadership team at Westlake has a deep comprehension of auto finance, a strong balance sheet and an entrepreneurial spirit that will enable CULA to autonomously continue growth for years to come.”
Westlake Financial Services is a member of The Hankey Group. Established by Hankey more than 45 years ago, The Hankey Group is headquartered in Los Angeles and comprised of seven operating companies with 2,500 employees specializing in automotive finance, insurance, auto rental, real estate and technology.
As of the first quarter, The Hankey Group’s total assets are $8.5 billion.
Westlake Financial Services was represented in the transaction by lead corporate counsel Richard Hong along with his team of the Los Angeles-based law firm of Greenberg Glusker. Credit Union Leasing of America was represented by Christian Salaman and Jason Stirling, partners with Pillsbury Winthrop Shaw Pittman, headquartered in New York.
The latest report from Fitch Ratings indicated U.S. auto loan and lease credit performance will likely continue to deteriorate in the second half of 2016 and into 2017.
Analysts noted year-over-year credit performance deteriorated for auto finance companies in the first half of 2016, despite improved loss rates in the first half of this year relative to the second half of last year, which Fitch attributed primarily to seasonality.
“Fitch expects credit performance to continue to deteriorate going into 2017, particularly in the subprime segment as less tenured auto finance companies with looser underwriting standards have entered the market in recent years,” Fitch Ratings director Michael Taiano said.
Strong vehicle installment contract as well as lease portfolio growth for Fitch-rated auto finance companies continued in the first half of this year due to strong vehicle sales, low interest rates and continued consumer demand for leases and extended loan terms. Although analysts acknowledged the growth rate decelerated slightly from last year.
Fitch is expecting financing growth to continue to moderate, particularly should interest rates rise and used-vehicle values decline, which could impact lease pricing.
Despite the recent credit deterioration, Fitch-rated auto lenders' ABS credit performance continues to be strong relative to historical norms as the average net loss rate increased a modest 8 basis points to 0.73 percent in the second quarter of this year from 0.65 percent in the year-ago period.
The firm pointed out average 30-day delinquencies actually decreased slightly to 3.16 percent from 3.25 percent during the same period.
“Losses among the largest auto lenders remained low, but continue to normalize due to an increase in both loss frequency and severity,” Fitch said. “The average net charge-off rate on the managed portfolios for lenders cited in the report increased to 0.53 percent from 0.43 percent year-over-year.”
Fitch went on to mention that Huntington Bank, Chase and American Honda Finance ended the first half of the year with the lowest credit loss rates largely due to the prime nature of their portfolios and consistent underwriting standards.
“Credit losses and delinquencies for the auto finance industry will likely trend higher as more recent vintages continue to season and recovery values decline from historic highs,” Taiano said.
Auto Financial Group — an online provider of innovative financing products including CarMark Auto Finance for credit unions and banks — highlighted its summer growth figures this week, revealing increasing momentum in new customer signings with AFG's Balloon Lending program.
Since May, Auto Financial Group has signed six new credit unions to its Balloon Lending program, resulting in a reach increase of 3,351,865 new consumers. These new organizations include:
—Community Star Credit Union
—Cooperative Federal Syracuse's Community Development Credit Union
—Credit Union of Colorado
—Isabella Community Credit Union
—Palisades Federal Credit Union
—Rutgers FCU
AFG mentioned this group of credit unions represents combined assets of more than $1.75 billion across Colorado, Michigan, New Jersey, New York and Ohio.
“We welcome these financial institutions to the growing AFG family,” AFG chief executive officer Richard Epley said. “Residual based financing is at an all-time high in the U.S. and we’re excited that these institutions have chosen AFG’s Balloon Lending program to offer to their members."
Auto Financial Group also noted that it expects continued growth through the remainder of the year as the company seeks to provide its unique financing products and solutions to financial institutions across the U.S.
The balloon lending program, such as CarMark Auto Finance, can provide institutions with a residual based balloon loan program that is fully insured.
Through AFG's software, financial institutions are able to secure higher-yielding loans with lower monthly payments for their consumers, mitigate residual value risk, and position themselves to take advantage of the record market increases in residual value based financing.
As more off-lease vehicles hit the wholesale market, dealers and finance companies are likely to be challenged to find buyers who will purchase these potentially certified pre-owned units even as CPO sales continue to set records. In an effort to help the industry consider another option — used-vehicle leasing — Black Book released a white paper on Tuesday aimed at helping finance companies identify which vehicles will make good candidates for a used-lease program.
In the white paper, titled “How to Grow a Profitable Used Leasing Portfolio,” Black Book acknowledged that not all vehicles depreciate alike. And with fluctuating residual forecasts across all segments, analysts emphasized that it’s imperative finance companies, dealers and industry professionals rely on collateral data to identify the right vehicles for a used-lease portfolio.
“As the off-lease inventory of three- and four-year-old vehicles continues to increase this year and over the next few years, lenders, dealers and remarketers will need to find alternative channels to return these vehicles out into the market,” said Anil Goyal, senior vice president of automotive valuation and analytics for Black Book, who also will be one of the many experts coming to Las Vegas this November for Used Car Week.
“Used leasing may be the right choice for some of these vehicles, but the wrong decision can be detrimental to the profit margins of a portfolio, which is why collateral data can mitigate any vehicle profit risk,” Goyal continued.
Black Book’s white paper offers specific data examples that address certain scenarios:
• Where used leasing would not make sense: A comparison of a new vehicle finance environment against the same vehicle after 36 months, with data showing how the monthly payments offered would not differ greatly based on a number of criteria.
• Where used leasing would make sense: A similar comparison of a new vehicle with its counterpart at 36 months of age; this time, factors such as mileage and a residual without subvention show where the monthly payment would show a noticeable difference.
• How to leverage residual data to find used lease candidates: An explanation into residual forecasting and depreciation trends that can lead to the identification of optimal used lease opportunities based on collateral insight.
In light of those examples, we asked Goyal to speculate a bit. What if a large captive or other finance company that already holds a significant market share would “go all-in,” so to speak, with used leasing? What kind of ripple effect could it have on the market?
“This is why collateral data plays a key role, and it’s a big reason why we decided to investigate the issue through the new white paper,” said Goyal, who will be leading discussions during both the CPO Forum presented by Autotrader and the SubPrime Forum presented by Digital Recognition Network.
“Lenders that wish to increase their portfolio with more used leases need to rely on collateral data to identify which vehicles make good candidates,” Goyal continued. “By identifying the models that make the most sense, lenders will increase their chances of gaining profit potential with their portfolio.”
As many wholesale experts have said, off-lease volume is on the rise primarily because so much new-model leasing is occurring. In fact, Experian Automotive recently reported that new-vehicle leasing reached a new threshold during the second quarter as 31.44 percent of new-model financing was delivered as a lease. It’s situations like those that Goyal surmised as potential impediments preventing used-vehicle leasing from gaining significant momentum in the past.
“Volume plays a large role here. Because there is so much off-lease inventory available now, compared with six or seven years ago, lenders are now interested in identifying the different ways to move off-lease inventory,” Goyal said.
And if a vehicle ends up being connected to two leases, Goyal believes those units still will have life remaining for dealers to retail, perhaps with more financing attached.
“It would be no different than if those same vehicles went through a CPO program and then ended up on a buy-here, pay-here lot. In many cases, a used lease program might keep the mileage on a vehicle in check between months 36 and 60,” Goyal said.
To download Black Book’s latest white paper focused on used-vehicle leasing, go to this website.
With technology leveling the playing field to a degree, relationships nowadays really matter, especially when they involve how a dealer is going to get a delivery bought for their customers or how they’re going to have the floor planning for inventory.
The J.D. Power 2016 U.S. Dealer Financing Satisfaction Study determined the relationships auto finance providers develop with dealerships are critical to dealer satisfaction and to remaining competitive in the market, especially as the new-vehicle sales market tightens.
J.D. Power insisted a combination of “slowing” new-vehicle sales and an “uncertain” used-vehicle market is contributing to an already contested auto-lending environment. Analysts acknowledged technology has eliminated disparity of speed in financing, leaving finance companies to differentiate themselves by the relationship they are able to form with the dealership.
“Speed has been king and the area lenders have traditionally focused on, but as the market gets tougher, lenders need to center their attention on their relationships with dealers, or they are going to lose business," said Jim Houston, senior director of the automotive finance practice at J.D. Power.
“Lenders need to move beyond a transactional relationship with dealers to a richer consultative partnership,” Houston continued. “Lenders with a dealer-centric culture across their organization — not just in various pockets of the business — are the ones that are most likely to excel.”
Houston noted that in building a dealer-centric culture, finance companies must understand their dealers’ businesses and goals, which helps establish them in the eyes of dealers as their business partner and problem solver. That starts with communication with the dealer.
The study indicated that fewer than half of dealers receive consistent sales rep calls or visits, both of which can boost overall satisfaction by as much as 68 points and 75 points, respectively, on a 1,000-point scale. But it's more than just the frequency of the contact, it's the nature of those touch points that adds value to the relationship.
"Dealers value a lender that can help them handle the tough issues and solve those 'outside-the-box' situations,” Houston said. “This is where having the right people focused on their dealers and helping them execute their strategic plan is essential."
Opportunities to excel and grow business
The study identified three areas of opportunity for finance companies that will help them enhance their dealer relationships. They included:
1. Consistent performance among their dealer relationship managers
2. Identification of their best dealers and a prioritization of those relationships
3. Efforts that focus on areas most important to dealers
“These are the things dealers say they want from their lenders, but are not necessarily getting on a consistent basis,” Houston said. “When the market gets tough, lenders that meet dealer expectations are going to get a greater share of the business.”
Findings of the study showed that high satisfaction with finance companies leads dealers to increase the amount of business they send to those respective lenders over the next year. Falloff is swift when satisfaction declines.
When satisfaction scores are 900 points or higher, J.D. Power found 62 percent of dealers say they are likely to increase the amount of business they send to the lender over the next year.
When satisfaction falls to between 800 and 889, J.D. Power noticed only 37 percent of dealers indicate they intend to send more business to that finance company.
When satisfaction dips to 700-799, J.D. Power said only 22 percent of dealers intend to increase business with that finance company.
Analysts mentioned two other key findings from the study, which included:
—Speed still matters: Speed still plays a significant role when dealers are choosing lending partners.
When finance companies fund error-free contracts on the same day as they are submitted, dealer satisfaction increases by as much as 64 points.
When finance companies notify dealers of contract issues or errors within four hours after they are submitted, satisfaction increases by as much as 60 points.
—Exceptions to the rule: Dealers want their lending partners to value the total relationship. In some cases, this means providing exceptions when warranted.
A well-managed exception process can increase overall satisfaction by up to 79 points.
Dealer financing satisfaction rankings
German luxury brand captives dominated the dealer rankings.
Mercedes-Benz Financial Services ranked highest among lenders in the prime retail credit segment for a second consecutive year with a score of 961. Following in the rankings were BMW Financial Services (959), Alphera Financial Services (941), Lincoln Automotive Financial Services (936) and Infiniti Financial Services (930).
Mercedes-Benz Financial Services also ranked highest among finance companies in the retail leasing segment for a second consecutive year with a score of 982. Following in the rankings were BMW Financial Services (958), Ford Credit (913), Volvo Car Financial Services (912) and Subaru Motors Finance (911).
And making it a sweep for the captive, Mercedes-Benz Financial Services ranked highest among floor planning providers for a sixth consecutive year with a score of 986. Following in the rankings were BMW Financial Services (975), Huntington National Bank (969), Hyundai Motor Finance (945) and Kia Motors Finance (945).
J.D. Power explained satisfaction is measured across three factors in the prime and non-prime retail credit segments: finance provider offerings, application and approval process, and sales representative relationship.
Four factors are measured in the retail leasing segment: finance provider offerings, application and approval process, sales representative relationship and vehicle return process.
Four factors are measured in the floor planning segment: finance provider credit line, floor plan support, sales representative relationship, and floor plan portfolio management.
The 2016 U.S. Dealer Financing Satisfaction Study captures more than 20,000 finance provider evaluations across the four segments. These evaluations were provided by 3,100 new-vehicle dealerships in the United States. More details can be found here.
Prime retail credit overall customer satisfaction index scores, based on a 1,000-point scale:
Mercedes-Benz Financial Services: 961
BMW Financial Services: 959
Alphera Financial Services: 941
Lincoln Automotive Financial Services: 936
Infiniti Financial Services: 930
Subaru Motors Finance: 908
Jaguar Financial Group: 902
Chase Automotive Finance: 895
Land Rover Financial Group: 891
Huntington National Bank: 890
Volvo Car Financial Services: 890
Ford Credit: 888
NMAC: 884
BB&T: 881
Citizens One: 875
TD Auto Finance: 874
Ally Financial: 873
Mazda Capital Services: 873
Volkswagen Credit: 873
Industry Average: 868
Capital One Auto Finance: 867
Fifth Third Bank: 867
Bank of America: 866
SunTrust Bank: 864
Toyota Financial Services: 860
Kia Motors Finance: 859
Wells Fargo Dealer Services: 853
PNC Bank: 851
BMO Harris Bank: 844
US Bank: 835
Bank of The West: 822
Hyundai Motor Finance: 821
GM Financial: 815
Credit Union Direct Lending: 813
Honda Financial Services: 813
Chrysler Capital: 798
Note: Included in the study but not ranked due to small sample size are Acura Financial Services, Alaska USA Federal Credit Union, Fidelity Bank, First Niagara Bank, Gateway One Lending & Finance, MINI Financial Services, Santander Auto Finance and Security Service Federal CU.
Retail leasing overall customer satisfaction index scores, based on a 1,000-point scale:
Mercedes-Benz Financial Services: 982
BMW Financial Services: 958
Ford Credit: 913
Volvo Car Financial Services: 912
Subaru Motors Finance: 911
Land Rover Financial Group: 891
NMAC: 891
Jaguar Financial Group: 890
Mazda Capital Services: 886
Industry Average: 885
Toyota Financial Services: 869
Kia Motors Finance: 868
Honda Financial Services: 866
US Bank: 863
Ally Financial: 851
GM Financial: 843
Hyundai Motor Finance: 835
Chrysler Capital: 828
Note: Included in the study but not ranked due to small sample size are Infiniti Financial Services, Lincoln Automotive Financial Services, MINI Financial Services and Volkswagen Credit.
Floor planning overall customer satisfaction index scores, based on a 1,000-point scale:
Mercedes-Benz Financial Services: 986
BMW Financial Services: 975
Huntington National Bank: 969
Hyundai Motor Finance: 945
Kia Motors Finance: 945
Ford Credit: 944
Chase Automotive Finance: 941
Industry Average: 938
Ally Financial: 935
NMAC: 931
Bank of America: 927
GM Financial: 926
Toyota Financial Services: 899
Chrysler Capital: 897
Note: Included in the study but not ranked due to small sample size are PNC Bank, Volkswagen Credit and Wells Fargo Dealer Services.
General Motors Financial previously discussed how its subprime exposure would be declining as the finance company continues its strategy pivot to prime paper as the parent automaker’s captive provider.
The company’s second-quarter financial statement reinforced the approach as GM Financial reported that it originated $1.614 billion in subprime contracts during Q2 — deals with consumers with FICO scores of 620 and lower. That Q2 amount constituted 18 percent of its quarterly originations. For comparison, GM Financial indicated 20.6 percent of its originations a year earlier fell into subprime, a figure that amounted to $1.698 billion.
“Despite the competitive environment, GM Financial did maintain credit and pricing discipline,” president and chief executive officer Dan Berce said when the company discussed its results last week.
The company reported that its total retail loan originations came in at $4.2 billion for the quarter that ended June 30, compared to $4.1 billion for the quarter that wrapped up on March 31 and $4.3 billion in the year-ago quarter.
GM Financial highlighted that its retail loan originations at the halfway point of 2016 stood at $8.3 billion, compared to $8.4 billion at the midpoint of last year.
The company’s outstanding balance of retail finance receivables was $30.9 billion on June 30. GM Financial determined the subprime loan portfolio represented approximately 16 percent of its earning assets, down from 19 percent when 2015 closed.
“We expect that subprime mix to continue declining with growth in our commercial, lease and prime portfolios in North America,” GM Financial executive vice president and chief financial officer Chris Choate said.
On the leasing side, GM Financial mentioned Q2 operating lease originations climbed year-over-year to $6.5 billion, up from $5.6 billion in the year-ago quarter. During Q1, the finance company produced $6.8 billion in operating leases.
Through six months, GM Financial posted $13.3 billion in operating lease originations, up from $8.6 billion a year earlier.
All of that activity helped GM Financial to generate $189 million in net income, a $3 million rise year-over-year.
The company’s net income at the 2016 midpoint came in at $353 million, up $17 million compared to the same juncture a year ago.
“GM Financial again reported strong operating results, earning $266 million in pretax income in our second quarter. Importantly, we continued expansion of our captive presence with GM customers and dealers,” Berce said.
The company added that the outstanding balance of commercial finance receivables was $9.4 billion when the second quarter closed, up from $9.2 billion a quarter earlier and $7.8 billion a year earlier.
As far as how that consumer paper is performing, GM Financial noted retail finance receivables 31 to 60 days delinquent constituted 3.4 percent of the portfolio as of June 30, down from 3.6 percent a year earlier. Accounts more than 60 days delinquent represented 1.5 percent of the portfolio, down from 1.6 percent when last year’s Q2 finished.
The company indicated its annualized net charge-offs were 1.7 percent of average retail finance receivables for the second quarter, up from 1.6 percent for the quarter a year earlier. For the first six months of 2016, annualized retail net charge-offs stood at 1.8 percent, down from 1.7 percent a year ago.
“The credit performance we're seeing does reflect the portfolio mix shift to prime,” Berce said. “In fact, the subprime portion of our portfolio, defined again as FICO scores less than 620, is now 55 percent of the North America portfolio compared to 71 percent a year ago.
“Recovery rates for the quarter were 55 percent, slightly higher seasonally than the March quarter, but down from 59 percent a year ago. We do expect recovery rates to continue to trend down throughout 2016,” he continued.
GM Financial added its total available liquidity stood at $15.4 billion as of June 30, consisting of $3.1 billion of cash and cash equivalents, $10.7 billion of borrowing capacity on unpledged eligible assets, $0.6 billion of borrowing capacity on committed unsecured lines of credit and $1.0 billion of borrowing capacity on a junior subordinated revolving credit facility from GM.
