How Did GM Financial Perform in 4Q16?



GM Financial Company

General Motors (GM) has a variety of vehicles ranging from small cars to large trucks in its product lineup. The majority of its portfolio is targeted to the masses. To encourage people to purchase its vehicles, the company provides automotive financing services through General Motors Financial Company. Let’s take a look at GM Financial Company’s performance in 4Q16.

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Solid 4Q16 revenues

In 4Q16, GM Financial reported revenues of $2.7 billion, about 42% higher than its revenues of $1.9 billion in the corresponding quarter of the previous year.

Likewise, in fiscal 2016, revenues from the company’s financial services arm have risen 48% YoY (year-over-year) to $9.6 billion. In fiscal 2015, GM Financial’s revenues accounted for just 4.2% of GM’s total revenues, whereas in fiscal 2016 it accounted for 5.7%.

Key growth drivers

The strong performance of GM Financial can primarily be attributed to GM’s retail sales growth in the United States along with improved performance in Europe and South America.

It’s important to note that the majority of retail vehicle customers prefer to use vehicle financing services when purchasing vehicles. As the company continues to cut its fleet sales and make efforts to improve its retail vehicle sales, investors can probably expect the positive trend in GM Financial’s revenues to continue.

Higher retail vehicle sales that drive these revenues should also lead to further expansion in GM’s profitability. GM Financial revenues can be seen as an important indicator of General Motors’ overall performance.

Currently, the company’s financing arm provides its services primarily in North America, Europe, China, and South America. At the end of 2015, GM Financial had 50 facilities globally. Of these, 22 are located in the United States. Other major facilities outside the United States include those in Brazil, Canada, China, Germany, Mexico, and the United Kingdom.

Mainstream automakers (IYK) such as Toyota (TM), Ford (F), and Volkswagen (VLKAY) also provide financing facilities to their customers with their own financial services arms.

Read on to the next parts for more key highlights of GM’s 4Q16 earnings.


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