A couple of leading auto lenders are keeping it conservative when it comes to higher discounts or looser loan approvals to capture more volume – even as consumers and dealers complain about high interest rates and a lack of affordability.
On the positive side for dealers, floorplan expense is down. That’s because inventory is down, following a last-minute rush among consumers to buy new vehicles in March and April to beat tariffs on imported autos and auto parts. Floorplan is the term for the money dealerships borrow to pay for inventory – to be repaid with interest when the vehicle is sold.
In a recent report, General Motors and its captive finance company, GM Financial, say they are keeping a tight rein on incentive spending.
“Our share gains came on the back of strong product, not aggressive pricing,” Paul Jacobsen, GM chief financial officer, says during a conference call to present GM earnings for the second quarter and the first half of 2025. In the first half, GM’s U.S. incentives as a percentage of average transaction price were below 5%, and more than 2 percentage points below the industry average.
GM Financial originations, including loans and leases on new and used vehicles, for the second quarter were $14.9 billion, up 9.9% vs. a year ago. For the first half, GM Financial originations were $29.5 billion, up 12.4%.
High Rated
Meanwhile, Ally Financial, which says it’s the biggest U.S. bank-based auto lender, continues to focus on borrowers with high credit ratings for both new and used vehicles, Ally says in an earnings call.
About 42% of Ally originations in the second quarter, new and used combined, belong to borrowers in Ally’s highest-rated risk tier, about even with a year ago at 44%. Total Ally originations for the second quarter were $11 billion, up 12% vs. a year ago.
Ally originations to borrowers with “super prime” FICO credit scores – that is, 760 and above – accounted for about 29% of the total, the company says. Ally’s average FICO score for new-vehicle originations was 726 for the second quarter, up from 714 a year ago. For used-vehicle loans, the average was 703 vs. 710 a year ago, the company says.
Ally defines credit scores below 620 as “nonprime.” Borrowers with scores below 620 or with no FICO score accounted for about 13% of total originations for the second quarter, about the same as a year ago.
Less Interest
As noted, many dealerships nationwide are spending less on floorplans because inventory is down on average. According to Cox Automotive, new-vehicle inventory fell below an estimated 2.5 million at the end of June. A year earlier, it was approaching 2.9 million, on its way to almost 3.3 million at the end of December 2024.
Besides the sell-down in March and April, some OEMs have been holding back on producing too many tariff-heavy models while they shift production, if possible, to U.S. plants, and likewise switch parts content to avoid high-tariff imported parts.
GM reports dealer inventory at the end of the second quarter of 526,000 units. That’s down 9.5% vs. a year ago and 11.9% vs. the end of 2024.
GM Financial reports its commercial finance receivables total was $15.3 billion for dealers in North America as of June 2025. That’s down a bit vs. $15.7 billion a year earlier.
The decline comes despite GM Financial’s report that it had 1,994 U.S. floorplan dealers as of June 2025, up 1.6% vs. a year ago. GM Financial says it’s the leading provider of floorplan financing for U.S. GM dealers, with a market share of 47.8% at the end of June, up from 46.9% a year ago.
Separately, Ally says its outstanding floorplan loans at the end of the second quarter were $14.7 billion, down 21.4% vs. a year ago.
“Through the first half of the year, commercial floorplan balances have been lower than expected,” Ally CEO Michael Rhodes says in the earnings call. He acknowledges that’s probably good news for dealers. Rhodes says, “Dealer inventory trends are choppy and difficult to predict. However, lower floorplan balances are supporting healthier dealer fundamentals.”
