How Did GM Financial Company Perform in 4Q17?



GM’s financial services

General Motors (GM) has a wide variety of vehicles in its product lineup, ranging from small cars to large trucks. To encourage consumers to buy its vehicles, the company provides automotive financing services through General Motors Financial Company. Let’s see how GM Financial Company performed in 4Q17.

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Solid 4Q17 EBIT and revenues

In 4Q17, GM Financial reported revenues of $3.3 billion, about 26.9% higher than its revenues of $2.6 billion in the same quarter of the previous year. Similarly, in the fourth quarter last year, the financial services’ adjusted EBIT (earnings before interest and tax) increased by about 50% YoY (year-over-year) to $0.3 billion from $0.2 billion in 4Q16.

Overall, GM Financial revenues accounted for 8.8% of GM’s total revenues in 2017 as compared to just 5.7% in 2016. Other large automakers (IYK) such as Toyota (TM), Ford (F), and Volkswagen (VLKAY) also provide finance options to their customers and dealers with their own financial services arms.

Key drivers

The improved performance of GM Financial can mainly be attributed to the company’s full captive strategy execution.

It’s important to note that the majority of retail customers use vehicle financing services. As GM continues to focus on retail vehicle sales, investors can expect the positive trend in GM Financial’s revenues to continue in 2018.

In the next part, we’ll discuss some other key highlights of GM’s 4Q17 earnings conference call.


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