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Richard Tatford

GENERAL Motors Holden has launched a consumer finance package that is specifically designed to help sell more vehicles and to help support Holden dealers.

The funding will only be available through Holden dealers and only apply to the Holden model range with packages designed to encourage ownership of much shorter terms than is the case in the market today.

Holden Financial Services (HFS) will be open for business early next year and is backed by GM’s new global finance and insurance operations, GM Financial.

GM Financial has brought GM back into the finance game following the sale of its GMAC predecessor in 2009 when it hit severe headwinds in the wake of the global financial crisis.

Holden Financial Services plans to concentrate initially on a guaranteed future value (GFV) product which GoAutoNews Premium understands is designed to address the recent pessimistic view of the resale value of the new imported Commodore by the used-car price services.

HFS managing director Richard Tatford, who has 30 years of automotive financing experience in Europe and Australia and was head of GM Financial International Operations’ retail program development, said the main focus will be the GFV product.

Reflecting on the return of GM’s finance business in Australia, Mr Tatford told GoAutoNews Premium that it was one of the engines to drive sales and “will only be available on new Holdens through Holden franchised dealers”.

“We’ve been asked to specifically come back to Australia. It is our mission statement – indeed it’s our mission statement worldwide – to help GM sell more vehicles. There’s also the ability to make some money.”

Its predecessor was General Motors Acceptance Corporation (GMAC) that was once called “a bank that sold cars”. GMAC, which started in 1919, was sold in 2009 to Ally Bank, later Ally Financial.

The timing for HFS comes as Australia’s lending regulations enter a tumultuous period that will limit dealership income from F&I and place more pressure on other parts of the business.

“It is purely coincidental that we are launching as ASIC introduces its changes to the F&I industry,” Mr Tatford said.

“The regulations are being tightened in Australia and I think – and I have been telling lots of people – that it’s a great time to set up a finance company in Australia.

“A lot of the regulations that you are introducing into Australia now are very similar to European legislation that has been brought in progressively over the past 10-15 years in the UK and the EU.

“I think the changes are good for the consumer and good for the industry.”

The GFV product, to be launched at the same time as insurance products, will be available over shorter loan periods than currently experienced by many Australians.

“Standard loans in Australia are up to 84 months and I believe the average is 61 months,” Mr Tatford said.

“So the GFV product tends to be over a shorter period, typically two or three years, four years at the most.

“Our research shows customers want to change their vehicles more often.
“That is because some have been in long-term loans and it may take a long time before they’re in an equity position to be able to change their car.

“The GFV product means that at the end of the term, when they get to the end of the loan period, they can’t be in a position where there is any negative equity because – subject to fair wear and tear conditions and a distance limit – we have a guarantee.

“So they wouldn’t have to be paying out anything at the end of the term.”

Holden Commodore

Mr Tatford said it is normal for the company to take the residual value risk as “we are very experienced at doing this in other countries”.

“We were doing it extensively throughout Europe up until the recent sale of GM’s interests there,” he said.

“It is a massive product in the US and North America and also is becoming more prevalent in Latin America.”

Mr Tatford said that the products that will become available early next year in Australia could lead to some more innovative finance.

“We are looking at the possibility of bringing in additional products to the Holden Financial services offering,” he said, not dismissing the possibility of a subscription service.

“We will be guided by the wants and needs of Holden dealers and their customers.

“I know that the Holden dealers want us to do wholesale finance and that’s the top of my agenda. But it won’t be available from the launch date. It is something that we will plan ahead for.”

Mr Tatford said Holden dealers have been extremely supportive and that “a number were very willing to help us design the products and get involved in pilots and focus groups”.

“I think the network will be very supportive.”

Mr Tatford has a four-year term “as a minimum, maybe longer if I can get an extension on my visa”.

Globally, GM’s financial phoenix posted a full-year profit in 2017 of $A1.6 billion – representing about 10 per cent of GM’s total profit – with hopes that the financial arm will grow to $A2.1 billion in a few years. It had assets in 2017 of $A112 billion.

By Neil Dowling