General Motors (GM) has a variety of vehicles, ranging from small cars to large trucks, in its product lineup. Most of its portfolio is targeted towards common consumers. To encourage people to purchase its vehicles, the company provides automotive financing services through General Motors Financial Company. Let’s take a look at how GM Financial performed in 1Q17.
Solid 1Q17 revenues
In 1Q17, GM Financial reported revenues of $2.9 billion—about 38% higher than revenues of $2.1 billion in 1Q16.
In 1Q17, the adjusted EBIT (earnings before interest and tax) from the company’s financial services arm rose ~50% YoY (year-over-year) to $0.3 billion.
In fiscal 2016, GM Financial revenues accounted for 5.7% of General Motors’ total revenues. 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.
Key growth drivers
GM Financial had a solid performance mainly due to the company’ retail sales growth in the US along with improved performance in Europe and South America.
It’s important to note that most 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.
In the next part, we’ll discuss other key highlights of General Motors’ 1Q17 earnings conference call.