GE Money’s sales finance unit is discontinuing its consumer finance programs in the marine and RV markets.
“This was an extremely difficult decision for GE Money, but one that we believe is the right operational adjustment for this environment,” the company said in a statement.
“GE Money seeks to invest in markets where it can provide a unique and competitive value to partners and where it will have the strongest long-term growth,” according to the company. “Based on the current economic environment, GE Money has been challenged to continue to deliver a strong level of return in the marine space.”
This change relates only to GE Money and its consumer lending agreements. An acceptance and funding schedule for consumer credit applications from non-OEM and OEM partners has been outlined through July 2008, according to GE Money.
Edward Aaron, an analyst with RBC Capital Markets, said GE’s exit “appears to be part of a broader effort by GE to selectively reduce its exposure to consumer finance.”
The move, he said, should not substantially affect the lending environment because there’s still enough lending capacity to absorb GE’s volume.
“That said, this news is clearly a sign of the times and yet another data point supporting our stance that credit availability is a growing risk,” he said in his report.
Aaron noted the move has a direct impact on two RV manufacturers since Thor Industries and Monaco Coach have partnerships with GE.
GE Money will continue to finance some marine products as part of its Powersports portfolio, including Yamaha Sportboat and loose engines, BRP Sportboats and Johnson/Evinrude loose engines. GE Money programs in Powersports, Trailer and Outdoor Power Equipment remain unchanged.
GE Capital Solutions, Commercial Distribution Finance continues to be a provider of specialized business finance solutions to marine manufacturers and dealers.
“In general, we believe lenders are continuing to tighten their standards,” Aaron wrote. “Approval rates are declining and lenders are becoming more strict on advances.”
This article originally appeared in the June 2008 issue.