DETROIT — As General Motors evolves its vehicle portfolio and adds new business lines, its captive is ready to help.
GM Financial has given the automaker a boost during much of the pandemic and throughout the global microchip shortage by running promotions at the onset of the COVID-19 crisis, consistently paying dividends to GM and carefully planning remarketing strategies. The role of the 11-year-old captive will continue to expand in the next few years as GM launches its latest digital retail platform, powered by Tekion, and as the automaker elevates new business models, such as BrightDrop, its commercial electric van business, and Cruise, its majority-owned self-driving subsidiary.
“All of those initiatives within GM, we would have a seat at the table. From that seat at the table, we’ve taken that back to our organization to say, ‘What part do we need to play as a captive?’ ” said GM Financial CEO Dan Berce, who also is on the automaker’s senior leadership team.
As GM adjusts its digital retail approach and expands its Ultium battery applications, GM Financial also will continue to evolve. The captive will support any GM sales, Berce said, including fuel cell or battery-powered vehicles, BrightDrop and Cruise.
In June, the captive provided Cruise with a multiyear $5 billion line of credit as the company prepares to commercialize its self-driving ride-hailing business.
Over the past two years, GM Financial helped drive demand with 0 percent interest for 84 months and 90-day deferral offers during the early days of the pandemic, boosted GM’s balance sheet with $2 billion paid in dividends and took advantage of rising used-vehicle values in its remarketing strategy.
“A lot of captives just ended up selling [used vehicles] at the first opportunity,” Berce said. “We really cadenced our sales between June and September of last year, which in hindsight was a great decision because the market kept going up and we took advantage of our cadence.”
Auto lenders, in most cases, have more frequent contact with customers post-sale than automakers and even dealers. GM Financial has been working to enhance its website and mobile app for a better customer experience as GM begins to launch EVs.
The lender also has been involved with the automaker’s development of its next digital retail platform.
“Having a strong captive integrated with sales and marketing has to be a strategic advantage,” said Jonathan Smoke, chief economist for Cox Automotive. “Digital retailing makes [the captive] more visible.”