Following its recent spate of corporate acquisitions during the past two years, GE now holds a large chunk of the estimated $12 billion retail finance powersports market, along with Household and the captive financing operations of Honda and Harley-Davidson.
But that doesn’t mean that service goes down, says Greg Pierce, vice president of GE’s retail financial services. In fact, it’s just the opposite. The company has earned the business of more than half of the top 15 powersports OEMs by providing unique financing packages, not by offering a few generic programs.
“We’ve spent a lot of time with our dealers and their end users,” says Pierce. “They want options; the days of generalization are gone. Different dealers and different customers have different needs.”
GE does business across the board in retail financing, providing installment loans so customers can purchase a machine and accessories and then making revolving credit available so they can purchase service and parts, garments and accessories. The company’s retail mix is divided about evenly between the two segments, says Pierce.
In addition to acquiring the portfolio of Conseco Finance this year, GE also picked up several new OEM accounts, including Aprilia and Triumph. It added KTM last year.
“Our overall sense is that this is an area where GE is a major player. Our customers are telling us they are seeing us as a partner, and our goal is to help them be more successful. That way, everybody wins.”
Take a look at the marketplace and you’ll probably find loan packages ranging from ones carrying a 5% interest rate for 60 months to others charging zero percent for a short period.
“The customer and the dealer have about a 50/50 split in what they want,” says Pierce. “Both products are alive and well. Each product has benefits. If you call 20 dealers, you’ll find 10 on each side.”
Pierce says low percentage rate financing is certainly a trend this year. “It’s really driven by the auto industry, and it’s an extension of the auto industry. It’s a very strong driver, something like 6.9% or lower for 60 months. That’s a must have for an OEM to move units.”
On the other hand, the customer responds well to to niches, such as zero down where the customer doesn’t have to bring any equity to the offer. “That brings our risk up a little bit,” Pierce notes, “as opposed to 15%-20% equity.”
Pierce isn’t in the forecasting business, so he doesn’t talk about where interest rates might go this year, although most observers are looking for some increase in rates.
“We’ve built a strong database after more than 15 years in retail finance lending,” he says, “that allows us to successfully price our products and work with our customers. Our job is to react to the market.
“One of the things that our customers appreciate about us is our stability and consistency. We’re less affected by (outside) environmental factors.” PSB