Increased Approval of Loans for High Credit Scores, Reduction in Excess Stock Levels
In the ever-evolving automotive industry, General Motors (GM) and its captive finance company, GM Financial, are navigating a challenging lending landscape characterized by selective loan approvals and cautious lending strategies.
- Loan Approvals and Lending Environment: The tightening of auto loan approvals has been particularly noticeable among lower-income and subprime borrowers. This shift has resulted in a rise in the average credit score for those receiving auto financing, up by about eight points in early 2025. This trend reflects a more selective approach by lenders focusing on lower-risk customers [1]. Delinquencies on auto loans, particularly among subprime borrowers, have risen significantly year-over-year, indicating borrower strain and a potentially increased risk profile for lenders [3]. New auto loan originations remain steady for new cars but decreased for used cars, reflecting the cautious lending environment amid higher interest rates.
- Discounts and Financing Offers from General Motors: To stimulate sales and manage inventory, GM is offering notable incentives and discounts. For instance, 0% APR financing is available on select Chevrolet 2024 models like Suburban and Tahoe, as well as various 2025 Chevrolet EVs [2]. Other GM brands like Buick and Cadillac also provide competitive low-APR financing offers, along with cash incentives up to several thousands of dollars [2]. These promotions suggest a strategy focused on attracting buyers with strong credit at low rates, aiming to maintain sales momentum amid a tightening credit environment.
- Lender Strategies (Ally Financial and broader market): Ally Financial, a major auto lender closely tied with GM, is likely reflecting these market conditions by increasing credit standards, as evidenced by the overall credit tightening and rising delinquency trends across subprime borrowers [3]. Market-wide, lenders are restricting financing to higher-credit-quality borrowers while offering competitive rates and incentives to attract those customers ready to finance new vehicles [1][2]. Some credit unions and other lenders are innovating in interest rate strategies, such as Wings Financial's option to reduce auto loan interest rates through points redemption programs, indicating a broader lender move to personalize and incentivize lending [1].
Despite consumer and dealer complaints about high interest rates and lack of affordability, auto lenders are not offering higher discounts or looser loan approvals to increase volume. GM's dealer inventory at the end of the second quarter of 2025 was 526,000 units, a decrease of 9.5% compared to the same period last year. Ally's outstanding floorplan loans at the end of the second quarter of 2025 were $14.7 billion, a decrease of 21.4% compared to the same period last year. GM Financial's commercial finance receivables total for dealers in North America as of June 2025 was $15.3 billion, slightly lower than $15.7 billion a year earlier.
In the face of these challenges, some OEMs are holding back on producing tariff-heavy models and shifting production to U.S. plants, and changing parts content to avoid high-tariff imports. New-vehicle inventory in the U.S. fell below 2.5 million at the end of June 2025, down significantly from the same period in 2024. Lower floorplan balances are contributing to choppy and difficult-to-predict dealer inventory trends, as noted by Ally CEO Michael Rhodes.
[1] LendingTree (2025). "Auto Lending Report Q2 2025." LendingTree. [2] CarsDirect (2025). "General Motors Incentives for June 2025." CarsDirect. [3] Experian (2025). "State of the Automotive Finance Market: Q2 2025." Experian.
- The lending landscape in the aerospace industry mirrors the automotive one, with selective loan approvals and cautious lending strategies dominating.
- Personal-finance experts are recommending multiple strategies amid the challenging lending environment for borrowers, such as investing in home-and-garden projects for home equity, improving credit scores, and managing debt.
- In the realm of business and personal-finance, it has become crucial for individuals to stick to their saving targets, monitor interest rates on banking-and-insurance products, and diversify investments to counterbalance market volatility.
- The technology sector is thriving, particularly in data-and-cloud-computing and fintech, providing opportunities for startups and established companies alike.
- Meanwhile, the travel industry is reporting a steady recovery, with budget-friendly airlines and travel packages attracting increased demand and reducing strain on personal-finance.
- For those passionate about cars, shopping for new, used, or electric vehicles has become more complicated by the cautious lending strategies, but revenue from the casino-and-gambling industry seems to be holding up relatively well.
- In the sports world, sponsorship deals and team revenues continue to drive growth and attract investors, while weather forecasts indicate a moderate summer, giving a boost to outdoor events and travel.
- The real-estate sector is evolving rapidly, with digital platforms and remote services shaping the market and creating new opportunities for businesses and individuals.
- As the industry adapts to these trends and changes, it becomes essential for stakeholders, including consumers, businesses, and investors, to stay informed and adapt their strategies accordingly.
