General Motors Financial (ACF) 10-Q 2017 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________________ 

FORM 10-Q

(Mark One)

ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________________ to ________________

Commission file number 1-10667

______________________________________________ 

General Motors Financial Company, Inc.

(Exact name of registrant as specified in its charter)

State of Texas	75-2291093
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

801 Cherry Street, Suite 3500, Fort Worth, Texas 76102

(Address of principal executive offices, including Zip Code)

(817) 302-7000

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  Q    No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  Q    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer (Do not check if a smaller reporting company) ý Smaller reporting company o Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes o No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  Q

As of April 27, 2017, there were 505 shares of the registrant’s common stock, par value $1.00 per share, outstanding. All of the registrant’s common stock is owned by General Motors Holdings LLC.

INDEX

		Page
PART I
Item 1.	Condensed Consolidated Financial Statements	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Cash Flows	3
	Notes to Condensed Consolidated Financial Statements	4
	Note 1. Summary of Significant Accounting Policies	4
	Note 2. Disposition of Business	4
	Note 3. Related Party Transactions	4
	Note 4. Finance Receivables	6
	Note 5. Leased Vehicles	9
	Note 6. Equity in Net Assets of Non-consolidated Affiliates	9
	Note 7. Debt	9
	Note 8. Variable Interest Entities	10
	Note 9. Derivative Financial Instruments and Hedging Activities	12
	Note 10. Commitments and Contingencies	13
	Note 11. Income Taxes	14
	Note 12. Segment Reporting	14
	Note 13. Accumulated Other Comprehensive Loss	16
	Note 14. Regulatory Capital	16
	Note 15. Guarantor Condensed Consolidating Financial Statements	16
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 6.	Exhibits	33
	Signature	34

GENERAL MOTORS FINANCIAL COMPANY, INC.

PART I

Item 1. Condensed Consolidated Financial Statements

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in millions)(Unaudited)

	March 31, 2017			December 31, 2016
ASSETS
Cash and cash equivalents	$	2,694		$	3,201
Finance receivables, net (Note 4; Note 8 VIEs)	46,910			43,190
Leased vehicles, net (Note 5; Note 8 VIEs)	37,302			34,526
Goodwill	1,200			1,196
Equity in net assets of non-consolidated affiliates (Note 6)	998			944
Property and equipment, net of accumulated depreciation of $147 and $127	291			279
Deferred income taxes	284			274
Related party receivables (Note 3)	617			510
Other assets (Note 8 VIEs)	4,244			3,645
Total assets	$	94,540		$	87,765
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Secured debt (Note 7; Note 8 VIEs)	$	42,579		$	39,270
Unsecured debt (Note 7)	37,370			34,606
Accounts payable and accrued expenses	1,501			1,474
Deferred income	2,588			2,365
Deferred income taxes	259			220
Related party payables (Note 3)	448			400
Other liabilities	803			737
Total liabilities	85,548			79,072
Commitments and contingencies (Note 10)
Shareholder's equity
Common stock, $1.00 par value per share, 1,000 shares authorized and 505 shares issued	—			—
Additional paid-in capital	6,512			6,505
Accumulated other comprehensive loss (Note 13)	(1,148		)	(1,238		)
Retained earnings	3,628			3,426
Total shareholder's equity	8,992			8,693
Total liabilities and shareholder's equity	$	94,540		$	87,765

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In millions)(Unaudited)

	Three Months Ended March 31,
	2017			2016
Revenue
Finance charge income	$	862		$	818
Leased vehicle income	1,942			1,184
Other income	75			73
Total revenue	2,879			2,075
Costs and expenses
Salaries and benefits	229			193
Other operating expenses	163			141
Total operating expenses	392			334
Leased vehicle expenses	1,438			893
Provision for loan losses	217			196
Interest expense	619			463
Total costs and expenses	2,666			1,886
Equity income (Note 6)	47			36
Income before income taxes	260			225
Income tax provision (Note 11)	58			61
Net income	202			164
Other comprehensive income, net of tax
Unrealized (loss) income on cash flow hedges, net of income tax benefit of $3	(4		)	—
Defined benefit plans, net of income tax	—			(1		)
Foreign currency translation adjustment, net of income tax expense of $4 and $0	94			153
Other comprehensive income, net of tax	90			152
Comprehensive income	$	292		$	316

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

GENERAL MOTORS FINANCIAL COMPANY, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions) (Unaudited)

	Three Months Ended March 31,
	2017			2016
Net cash provided by operating activities	$	1,416		$	1,158
Cash flows from investing activities
Purchases of retail finance receivables, net	(6,401		)	(4,165		)
Principal collections and recoveries on retail finance receivables	3,595			3,271
Net funding of commercial finance receivables	(541		)	(1,024		)
Purchases of leased vehicles, net	(4,794		)	(5,158		)
Proceeds from termination of leased vehicles	1,082			481
Purchases of property and equipment	(24		)	(20		)
Other investing activities	—			1
Net cash used in investing activities	(7,083		)	(6,614		)
Cash flows from financing activities
Net change in debt (original maturities less than three months)	(268		)	757
Borrowings and issuance of secured debt	8,361			7,054
Payments on secured debt	(4,805		)	(5,251		)
Borrowings and issuance of unsecured debt	2,968			3,131
Payments on unsecured debt	(574		)	(241		)
Debt issuance costs	(27		)	(26		)
Net cash provided by financing activities	5,655			5,424
Net decrease in cash, cash equivalents and restricted cash	(12		)	(32		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	37			58
Cash, cash equivalents and restricted cash at beginning of period	5,302			5,002
Cash, cash equivalents and restricted cash at end of period	$	5,327		$	5,028

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheet:

	March 31, 2017
Cash and cash equivalents	$	2,694
Restricted cash included in other assets	2,633
Total	$	5,327

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Summary of Significant Accounting Policies

Basis of PresentationThe condensed consolidated financial statements include our accounts and the accounts of our consolidated subsidiaries, including certain special-purpose financing entities utilized in secured financing transactions, which are considered variable interest entities (VIEs). All intercompany transactions and balances have been eliminated in consolidation.

The interim period condensed consolidated financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles (GAAP) in the United States of America. These interim period condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements that are included in our Annual Report on Form 10-K filed on February 7, 2017 (Form 10-K). Except as otherwise specified, dollar amounts presented within tables are stated in millions.

The condensed consolidated financial statements at March 31, 2017, and for the three months ended March 31, 2017 and 2016, are unaudited and, in management’s opinion, include all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results for such interim periods. The results for interim periods are not necessarily indicative of results for a full year.

Segment Information We are the wholly-owned captive finance subsidiary of General Motors Company (GM). We offer substantially similar products and services throughout many different regions, subject to local regulations and market conditions. We evaluate our business in two operating segments. The North America Segment includes our operations in the U.S. and Canada. The International Segment includes our operations in all other countries.

Note 2. Disposition of Business

On March 5, 2017, General Motors Holdings LLC, a wholly-owned subsidiary of GM and our parent, entered into a Master Agreement (the Agreement) with Peugeot, S.A. (PSA Group) pursuant to which PSA Group will acquire GM's Opel and Vauxhall businesses and certain other assets in Europe (the Opel/Vauxhall Business) and certain of our European subsidiaries and branches (European Operations, together with the Opel/Vauxhall Business, the Transferred Business).

The net consideration to be paid for our European Operations will be 0.8 times their book value at closing, which we estimate will be approximately $1 billion, denominated in Euros. The purchase price is subject to certain adjustments as provided in the Agreement. We expect to recognize a disposal loss of approximately $700 million to $800 million at closing.

The transfer of the Opel/Vauxhall Business is expected to close by the end of 2017 and the transfer of our European Operations is expected to close as soon as practicable after the receipt of the necessary antitrust, financial and other regulatory approvals, which may be after the transfer of the Opel/Vauxhall Business, but not before. The transfer of our European Operations will not occur unless the transfer of the Opel/Vauxhall Business occurs.

Note 3. Related Party Transactions

We offer loan and lease finance products through GM-franchised dealers to customers purchasing new and certain used vehicles manufactured by GM and make commercial loans directly to GM-franchised dealers and their affiliates. We also offer commercial loans to dealers that are consolidated by GM and those balances are included in our finance receivables, net.

Under subvention programs, GM makes cash payments to us for offering incentivized rates and structures on retail loan and lease finance products. In addition, GM makes payments to us to cover certain interest payments on commercial loans. We also provide funding under lines of credit to GM.

In March 2017, we executed an agreement to purchase certain program vehicles from Maven Drive LLC (Maven), a wholly-owned subsidiary of GM. We simultaneously leased these vehicles to Maven for use in their ride-sharing arrangements. We account for these leases as direct-finance leases, which are included in our finance receivables, net.

4

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

We have related party payables due to GM, primarily for commercial finance receivables originated but not yet funded. These payables typically settle within 30 days. The following tables present related party transactions:

Balance Sheet Data	March 31, 2017		December 31, 2016
Commercial finance receivables, net due from dealers consolidated by GM(a)	$	339	$	401
Direct-finance lease receivables from Maven(a)	$	128	$	—
Advances drawn on lines of credit due from GM(b)	$	145	$	137
Subvention receivable(c)	$	471	$	373
Commercial loan funding payable(d)	$	438	$	389

	Three Months Ended March 31,
Income Statement Data	2017		2016
Interest subvention earned on retail finance receivables and leases(e)	$	111	$	103
Interest subvention earned on commercial finance receivables(e)	$	40	$	40
Leased vehicle subvention earned(f)	$	709	$	459

_________________

(a) Included in finance receivables, net.

(b) Included in related party receivables.

(c) Included in related party receivables. We received subvention payments from GM of $1.0 billion and $1.2 billion for the three months ended March 31, 2017 and 2016.

(d) Included in related party payables.

(e) Included in finance charge income.

(f) Included as a reduction to leased vehicle expenses.

Under our support agreement with GM (the Support Agreement), if our earning assets leverage ratio at the end of any calendar quarter exceeds the applicable threshold set in the Support Agreement, we may require GM to provide funding sufficient to bring our earning assets leverage ratio to within the applicable threshold. In determining our earning assets leverage ratio (net earning assets divided by adjusted equity) under the Support Agreement, net earning assets means our finance receivables, net, plus leased vehicles, net, and adjusted equity means our equity, net of goodwill and inclusive of outstanding junior subordinated debt, as each may be adjusted for derivative accounting from time to time. 

Additionally, the Support Agreement provides that GM will own all of our outstanding voting shares as long as we have any unsecured debt securities outstanding and that GM will use its commercially reasonable efforts to ensure that we will continue to be designated as a subsidiary borrower of up to $4.0 billion under GM’s corporate revolving credit facilities. We have the ability to borrow up to $1.0 billion under GM's three-year, $4.0 billion unsecured revolving credit facility and $3.0 billion under GM's five-year, $10.5 billion unsecured revolving credit facility, subject to available capacity. GM also agreed to certain provisions in the Support Agreement intended to ensure that we maintain adequate access to liquidity. Pursuant to these provisions, GM provided us with a $1.0 billion junior subordinated unsecured intercompany revolving credit facility (the Junior Subordinated Revolving Credit Facility).

We are included in GM's consolidated U.S. federal income tax returns. For taxable income we recognize in any period beginning on or after October 1, 2010, we are obligated to pay GM for our share of the consolidated U.S. federal and certain state tax liabilities. Amounts owed to GM for income taxes are accrued and recorded as a related party payable.  At March 31, 2017 and December 31, 2016, there are no related party taxes payable to GM due to our taxable loss position.  

5

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 4. Finance Receivables

	March 31, 2017			December 31, 2016
Retail finance receivables
Retail finance receivables, collectively evaluated for impairment, net of fees(a)	$	34,047		$	30,989
Retail finance receivables, individually evaluated for impairment, net of fees	1,957			1,921
Total retail finance receivables, net of fees(b)	36,004			32,910
Less: allowance for loan losses - collective	(568		)	(517		)
Less: allowance for loan losses - specific	(284		)	(276		)
Total retail finance receivables, net	35,152			32,117
Commercial finance receivables
Commercial finance receivables, collectively evaluated for impairment, net of fees	11,725			11,053
Commercial finance receivables, individually evaluated for impairment, net of fees	87			70
Total commercial finance receivables, net of fees	11,812			11,123
Less: allowance for loan losses - collective	(46		)	(43		)
Less: allowance for loan losses - specific	(8		)	(7		)
Total commercial finance receivables, net	11,758			11,073
Total finance receivables, net	$	46,910		$	43,190
Fair value of finance receivables	$	46,722		$	43,140

________________

(a) Includes $1.6 billion and $1.3 billion of direct-finance leases at March 31, 2017 and December 31, 2016.

(b) Net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $199 million and $191 million at March 31, 2017 and December 31, 2016.

We estimate the fair value of retail finance receivables using observable and unobservable Level 3 inputs within a cash flow model. The inputs reflect assumptions regarding expected prepayments, deferrals, delinquencies, recoveries and charge-offs of the loans within the portfolio. The cash flow model produces an estimated amortization schedule of the finance receivables. The projected cash flows are then discounted to derive the fair value of the portfolio. Macroeconomic factors could affect the credit performance of the portfolio and, therefore, could potentially affect the assumptions used in our cash flow model. A substantial majority of our commercial finance receivables have variable interest rates. The carrying amount, a Level 2 input, is considered to be a reasonable estimate of fair value.

Retail Finance Receivables	Three Months Ended March 31,
	2017			2016
Allowance for retail loan losses beginning balance	$	793		$	735
Provision for loan losses	213			197
Charge-offs	(307		)	(293		)
Recoveries	147			150
Foreign currency translation	6			7
Allowance for retail loan losses ending balance	$	852		$	796

6

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Retail Credit Quality We use proprietary scoring systems in the underwriting process that measure the credit quality of the receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g. FICO score or its equivalent), and contract characteristics. We also consider other factors, such as employment history, financial stability and capacity to pay. At the time of loan origination, substantially all of our International Segment customers have the equivalent of prime credit scores. In the North America Segment, while we historically focused on consumers with lower than prime credit scores, we have expanded our prime lending programs. A summary of the credit risk profile by FICO score band or equivalent scores, determined at origination, of the retail finance receivables in the North America Segment is as follows:

	March 31, 2017				December 31, 2016
	Amount		Percent		Amount		Percent
Prime - FICO Score 680 and greater	$	10,062	41.3	%	$	7,923	36.4	%
Near-prime - FICO Score 620 to 679	3,742		15.4		3,468		15.9
Sub-prime - FICO Score less than 620	10,550		43.3		10,395		47.7
Balance at end of period	$	24,354	100.0	%	$	21,786	100.0	%

In addition, we review the credit quality of our retail finance receivables based on customer payment activity. A retail account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. Retail finance receivables are collateralized by vehicle titles and, subject to local laws, we generally have the right to repossess the vehicle in the event the customer defaults on the payment terms of the contract. The following is a consolidated summary of the contractual amounts of delinquent retail finance receivables, which is not significantly different than the recorded investment for such receivables.

	March 31, 2017				March 31, 2016
	Total		Percent of Contractual Amount Due		Total		Percent of Contractual Amount Due
31 - 60 days	$	1,006	2.8	%	$	963	3.1	%
Greater than 60 days	441		1.2		421		1.4
Total finance receivables more than 30 days delinquent	1,447		4.0		1,384		4.5
In repossession	51		0.1		48		0.2
Total finance receivables more than 30 days delinquent or in repossession	$	1,498	4.1	%	$	1,432	4.7	%

At March 31, 2017 and December 31, 2016, the accrual of finance charge income had been suspended on retail finance receivables with contractual amounts due of $711 million and $807 million.

Impaired Retail Finance Receivables - TDRs Retail finance receivables that become classified as troubled debt restructurings (TDRs) are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. Accounts that become classified as TDRs because of a payment deferral accrue interest at the contractual rate and an additional fee is collected (where permitted) at each time of deferral and recorded as a reduction of accrued interest. No interest or fees are forgiven on a payment deferral to a customer; therefore, there are no additional financial effects of deferred loans becoming classified as TDRs. Accounts in the U.S. in Chapter 13 bankruptcy would have already been placed on non-accrual; therefore, there are no additional financial effects from these loans becoming classified as TDRs. Finance charge income from loans classified as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs.

7

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

At March 31, 2017 and December 31, 2016, the outstanding balance of retail finance receivables in the International Segment determined to be TDRs was insignificant; therefore, the following information is presented with regard to the TDRs in the North America Segment only. The outstanding recorded investment for retail finance receivables that are considered to be TDRs and the related allowance is presented below:

	March 31, 2017			December 31, 2016
Outstanding recorded investment	$	1,957		$	1,920
Less: allowance for loan losses	(284		)	(276		)
Outstanding recorded investment, net of allowance	$	1,673		$	1,644
Unpaid principal balance	$	1,998		$	1,967

Additional information about loans classified as TDRs is presented below:

	Three Months Ended March 31,
	2017		2016
Average outstanding recorded investment	$	1,939	$	1,636
Finance charge income recognized	$	60	$	51
Number of loans classified as TDRs during the period	16,474		14,646
Recorded investment of loans classified as TDRs during the period	$	287	$	254

The unpaid principal balance, net of recoveries, of loans that were charged off during the reporting period and were within 12 months of being modified as a TDR were insignificant for the three months ended March 31, 2017 and 2016.

Commercial Finance Receivables

Commercial Credit Quality We extend wholesale credit to dealers primarily in the form of approved lines of credit to purchase new vehicles as well as used vehicles. Each commercial lending request is evaluated, taking into consideration the borrower's financial condition and the underlying collateral for the loan. We use proprietary models to assign each dealer a risk rating. These models use historical performance data to identify key factors about a dealer that we consider significant in predicting a dealer's ability to meet its financial obligations. We also consider numerous other financial and qualitative factors including, but not limited to, capitalization and leverage, liquidity and cash flow, profitability and credit history. 

We regularly review our models to confirm the continued business significance and statistical predictability of the factors and update the models to incorporate new factors or other information that improves statistical predictability. In addition, we verify the existence of the assets collateralizing the receivables by physical audits of vehicle inventories, which are performed with increased frequency for higher risk dealers (i.e., Groups III, IV, V and VI). We perform periodic credit reviews of each dealership and adjust the dealership's risk rating, if necessary. Dealers in Group VI are subject to additional funding restrictions including suspension of lines of credit and liquidation of assets.

Performance of our commercial finance receivables is evaluated based on our internal dealer risk rating analysis, as payment for wholesale receivables is generally not required until the dealer has sold or leased the vehicle inventory. All receivables from the same dealer customer share the same risk rating. The following table summarizes the credit risk profile by dealer risk rating of commercial finance receivables:

			March 31, 2017				December 31, 2016
			Amount		Percent		Amount		Percent
Group I	-	Dealers with superior financial metrics	$	1,664	14.1	%	$	1,596	14.3	%
Group II	-	Dealers with strong financial metrics	3,804		32.2		3,445		31.0
Group III	-	Dealers with fair financial metrics	4,171		35.3		4,039		36.3
Group IV	-	Dealers with weak financial metrics	1,441		12.2		1,231		11.1
Group V	-	Dealers warranting special mention due to potential weaknesses	548		4.6		642		5.8
Group VI	-	Dealers with loans classified as substandard, doubtful or impaired	184		1.6		170		1.5
Balance at end of period			$	11,812	100.0	%	$	11,123	100.0	%

8

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

At March 31, 2017 and December 31, 2016, substantially all of our commercial finance receivables were current with respect to payment status and none were classified as TDRs. Activity in the allowance for commercial loan losses was insignificant for the three months ended March 31, 2017 and 2016.

Note 5. Leased Vehicles

	March 31, 2017			December 31, 2016
Leased vehicles	$	53,000		$	48,581
Manufacturer subvention	(8,372		)	(7,706		)
	44,628			40,875
Less: accumulated depreciation	(7,326		)	(6,349		)
Leased vehicles, net	$	37,302		$	34,526

The following table summarizes minimum rental payments due to us as lessor under operating leases:

	Years Ending December 31,
	2017		2018		2019		2020		2021
Minimum rental payments under operating leases	$	4,654	$	4,878	$	2,494	$	365	$	13

Note 6. Equity in Net Assets of Non-consolidated Affiliates

We use the equity method to account for our equity interest in SAIC-GMAC Automotive Finance Company Limited (SAIC-GMAC), a joint venture that conducts auto finance operations in China. The income of SAIC-GMAC is not consolidated into our financial statements; rather, our proportionate share of the earnings is reflected as equity income.

There were no cash dividends received from SAIC-GMAC during the three months ended March 31, 2017. We received cash dividends from SAIC-GMAC of $27 million during the three months ended March 31, 2016. At March 31, 2017 we had undistributed earnings of $189 million related to SAIC-GMAC.

Note 7. Debt

	March 31, 2017				December 31, 2016
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Secured debt
Revolving credit facilities	$	11,865	$	11,866	$	9,817	$	9,812
Securitization notes payable	30,714		30,814		29,453		29,545
Total secured debt	$	42,579	$	42,680	$	39,270	$	39,357
Unsecured debt
Senior notes	$	31,088	$	32,103	$	28,577	$	29,182
Credit facilities	3,453		3,452		3,354		3,354
Retail customer deposits	1,913		1,917		1,895		1,902
Other unsecured debt	916		918		780		782
Total unsecured debt	$	37,370	$	38,390	$	34,606	$	35,220
Total Secured and Unsecured debt	$	79,949	$	81,070	$	73,876	$	74,577
Fair value utilizing Level 2 inputs			$	77,267			$	69,990
Fair value utilizing Level 3 inputs			$	3,803			$	4,587

The fair value of our debt measured utilizing Level 2 inputs was based on quoted market prices for identical instruments and if unavailable, quoted market prices of similar instruments. For debt that has terms of one year or less or has been priced within the last six months, the carrying amount or par value is considered to be a reasonable estimate of fair value. The fair value of our debt measured utilizing Level 3 inputs was based on the discounted future net cash flows expected to be settled using current risk-adjusted rates.

9

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Secured Debt Most of the secured debt was issued by VIEs and is repayable only from proceeds related to the underlying pledged assets. Refer to Note 8 - "Variable Interest Entities" for further discussion.

During the three months ended March 31, 2017, we entered into new credit facilities or renewed credit facilities with a total net additional borrowing capacity of $182 million, and we issued securitization notes payable of $4.0 billion.

Unsecured DebtDuring the three months ended March 31, 2017, our top-tier holding company issued $2.5 billion in senior notes comprising:

	Amount Issued
3.45% Senior notes due January 2022	$	1,250
4.35% Senior notes due January 2027	$	750
Floating rate senior notes due January 2022	$	500

All of these notes are guaranteed solely by AmeriCredit Financial Services, Inc. (AFSI), our primary U.S. operating subsidiary.

Subsequent to March 31, 2017, our top-tier holding company issued $3.0 billion in senior notes comprised of $1.0 billion of 2.65% notes due in April 2020, $1.25 billion of 3.95% notes due in April 2024 and $750 million of floating rate notes due in April 2020. All of these notes are guaranteed solely by AFSI.

We accept deposits from retail banking customers in Germany. Following is summarized information for our deposits at March 31, 2017 and December 31, 2016:

	March 31, 2017				December 31, 2016
	Outstanding Balance		Weighted Average Interest Rate		Outstanding Balance		Weighted Average Interest Rate
Overnight deposits	$	788	0.40	%	$	799	0.50	%
Term deposits - 12 months	417		0.84	%	423		0.93	%
Term deposits - 24 months	298		1.24	%	281		1.26	%
Term deposits - 36 months	410		1.47	%	392		1.48	%
Total deposits	$	1,913	0.86	%	$	1,895	0.91	%

Compliance with Debt CovenantsSeveral of our revolving credit facilities require compliance with certain financial and operational covenants as well as regular reporting to lenders, including providing certain subsidiary financial statements. Certain of our secured debt agreements also contain various covenants, including maintaining portfolio performance ratios as well as limits on deferment levels. Our unsecured senior notes contain covenants including limitations on our ability to incur certain liens. At March 31, 2017, we were in compliance with these debt covenants.

Note 8. Variable Interest Entities

Securitizations and Credit Facilities

The following table summarizes the assets and liabilities related to our consolidated VIEs:

	March 31, 2017		December 31, 2016
Restricted cash(a)	$	2,598	$	2,067
Finance receivables, net of fees	$	30,370	$	29,661
Lease related assets	$	23,154	$	19,341
Secured debt	$	41,671	$	38,244

_______________

(a) Included in other assets in the condensed consolidated balance sheets.

These amounts are related to securitization and credit facilities held by consolidated VIEs. Our continuing involvement with these VIEs consists of servicing assets held by the entities and holding residual interests in the entities. We have determined that we are the primary beneficiary of each VIE because we hold both (i) the power to direct the activities of the VIEs that most significantly impact the VIEs' economic performance and (ii) the obligation to absorb losses from and the right to receive benefits of the VIEs that could potentially be significant to the VIEs. We are not required, and do not currently intend, to provide any

10

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

additional financial support to these VIEs. Liabilities recognized as a result of consolidating these entities generally do not represent claims against us or our other subsidiaries and assets recognized generally are for the benefit of these entities operations and cannot be used to satisfy our or our subsidiaries obligations.

Other VIEsWe consolidate certain operating entities that provide auto finance and financial services, which we do not control through a majority voting interest. We manage these entities and maintain a controlling financial interest in them and are exposed to the risks of ownership through contractual arrangements. The majority voting interests in these entities are indirectly wholly-owned by our parent, GM. The amounts presented below are stated prior to intercompany eliminations and include amounts related to securitizations and credit facilities held by consolidated VIEs. The following table summarizes the assets and liabilities of these VIEs:

	March 31, 2017		December 31, 2016
Assets(a)	$	4,312	$	4,251
Liabilities(b)	$	3,604	$	3,559

_________________

(a) Comprised primarily of finance receivables, net of $3.6 billion and $3.5 billion at March 31, 2017 and December 31, 2016.

(b) Comprised primarily of debt of $3.0 billion and $3.0 billion at March 31, 2017 and December 31, 2016.

The following table summarizes the revenue and net income of these VIEs:

	Three Months Ended March 31,
	2017		2016
Total revenue	$	51	$	47
Net income	$	6	$	7

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GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 9. Derivative Financial Instruments and Hedging Activities

		March 31, 2017				December 31, 2016
	Level	Notional		Fair Value		Notional		Fair Value
Derivatives designated as hedges
Assets
Fair value hedges
Interest rate swaps	2	$	—	$	—	$	—	$	—
Cash flow hedges
Interest rate swaps	2,3	3,597		16		3,542		12
Foreign currency swaps	2	—		—		—		—
Total assets(a)		$	3,597	$	16	$	3,542	$	12
Liabilities
Fair value hedges
Interest rate swaps	2	$	8,950	$	317	$	7,700	$	276
Cash flow hedges
Interest rate swaps	2,3	717		1		1,280		3
Foreign currency swaps	2	802		24		791		33
Total liabilities(b)		$	10,469	$	342	$	9,771	$	312
Derivatives not designated as hedges
Assets
Interest rate swaps	2,3	$	15,455	$	74	$	8,667	$	55
Interest rate caps and floors	2	13,369		33		10,469		26
Foreign currency swaps	2	617		65		1,576		78
Total assets(a)		$	29,441	$	172	$	20,712	$	159
Liabilities
Interest rate swaps	2,3	$	14,225	$	55	$	8,337	$	36
Interest rate caps and floors	2	15,101		33		12,146		26
Foreign currency swaps	2	1,412		15		119		2
Total liabilities(b)		$	30,738	$	103	$	20,602	$	64

_________________

(a) Derivative assets are included in other assets in the condensed consolidated balance sheets.

(b) Derivative liabilities are included in other liabilities in the condensed consolidated balance sheets. Amounts accrued for interest payments in a net receivable position are included in other assets in the condensed consolidated balance sheets.

The fair value for Level 2 instruments was derived using the market approach based on observable market inputs including quoted prices of similar instruments and foreign exchange and interest rate forward curves. The fair value for Level 3 instruments was derived using the income approach based on a discounted cash flow model, in which expected cash flows are discounted using current risk-adjusted rates. The activity for interest rate swap agreements measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was insignificant for the three months ended March 31, 2017 and 2016.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

	Income (Losses) Recognized In Income
	Three Months Ended March 31,
	2017			2016
Fair value hedges
Interest rate contracts(a)(b)	$	11		$	(6	)
Cash flow hedges
Interest rate contracts(a)	(2		)	—
Foreign currency contracts(c)	6			—
Derivatives not designated as hedges
Interest rate contracts(a)	(5		)	—
Foreign currency derivatives(c)(d)	(22		)	69
Total	$	(12	)	$	63

	Gains (Losses) Recognized In Accumulated Other Comprehensive Loss
	Three Months Ended March 31,
	2017			2016
Cash flow hedges
Interest rate contracts	$	2		$	—
Foreign currency contracts	(3		)	—
Total	$	(1	)	$	—

	Gains (Losses) Reclassified From Accumulated Other Comprehensive Loss Into Income
	Three Months Ended March 31,
	2017			2016
Cash flow hedges
Interest rate contracts	$	1		$	—
Foreign currency contracts	(4		)	—
Total	$	(3	)	$	—

_________________

(a) Recognized in earnings as interest expense.

(b) Includes hedge ineffectiveness which reflects the net change in the fair value of interest rate contracts of $26 million and $2 million offset by the change in fair value of hedged debt attributable to the hedged risk of $27 million and $4 million for the three months ended March 31, 2017 and 2016.

(c) Recognized in earnings as other operating expenses and interest expense.

(d) Activity is partially offset by translation activity (included in other operating expenses) related to foreign currency-denominated loans.

Note 10. Commitments and Contingencies

Guarantees of Indebtedness The payments of principal and interest on senior notes issued by our top-tier holding company, our primary Canadian operating subsidiary and a European subsidiary are guaranteed by our primary U.S. operating subsidiary, AFSI. At March 31, 2017 and December 31, 2016, the par value of these senior notes was $31.5 billion and $29.0 billion. Refer to Note 15 - "Guarantor Condensed Consolidating Financial Statements" for further discussion.

Legal ProceedingsAs a retail finance company, we are subject to various customer claims and litigation seeking damages and statutory penalties, based upon, among other things, usury, disclosure inaccuracies, wrongful repossession, violations of bankruptcy stay provisions, certificate of title disputes, fraud, breach of contract and discriminatory treatment of credit applicants. Some litigation against us could take the form of class action complaints by customers and certain legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. We establish reserves for legal claims when payments associated with the claims become probable and the payments can be reasonably estimated. Given the inherent difficulty of predicting the outcome of litigation and regulatory matters, it is generally very difficult to predict what

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GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

the eventual outcome will be, and when the matter will be resolved. The actual costs of resolving legal claims may be higher or lower than any amounts reserved for the claims. At March 31, 2017, we estimated our reasonably possible legal exposure for unfavorable outcomes of up to $112 million, and have accrued $37 million.

In July 2014, we were served with a subpoena by the U.S. Department of Justice directing us to produce certain documents relating to our and our subsidiaries’ and affiliates’ origination and securitization of sub-prime automobile loans since 2007 in connection with an investigation by the U.S. Department of Justice in contemplation of a civil proceeding for potential violations of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989. Among other matters, the subpoena requests information relating to the underwriting criteria used to originate these automobile loans and the representations and warranties relating to those underwriting criteria that were made in connection with the securitization of the automobile loans. We have subsequently been served with additional investigative subpoenas to produce documents from state attorneys general and other governmental offices relating to our automobile loan and lease business and securitization of automobile loans and leases. These investigations are ongoing and could in the future result in the imposition of damages, fines or civil or criminal claims and/or penalties. No assurance can be given that the ultimate outcome of the investigations or any resulting proceedings would not materially and adversely affect us or any of our subsidiaries and affiliates.

Other Administrative Tax MattersWe accrue non-income tax liabilities for contingencies when management believes that a loss is probable and the amounts can be reasonably estimated, while contingent gains are recognized only when realized. In the event any losses are sustained in excess of accruals, they will be charged against income at that time.

In evaluating indirect tax matters, we take into consideration factors such as our historical experience with matters of similar nature, specific facts and circumstances, and the likelihood of prevailing. We reevaluate and update our accruals as matters progress over time. Where there is a reasonable possibility that losses exceeding amounts already recognized may be incurred, our estimate of the additional range of loss is up to $37 million.

Note 11. Income Taxes

For interim income tax reporting we estimate our annual effective tax rate and apply it to our year-to-date ordinary income. Tax jurisdictions with a projected or year-to-date loss for which a tax benefit cannot be realized are excluded from the annualized effective tax rate. The tax effects of unusual or infrequently occurring items, including changes in judgment about valuation allowances and effects of changes in tax laws or rates, are reported in the interim period in which they occur.

During the three months ended March 31, 2017 and 2016, income tax expense of $58 million and $61 million primarily resulted from tax expense attributable to entities included in our effective tax rate calculation. The decrease in tax expense is due primarily to an increase in U.S. tax credits.

We are included in GM’s consolidated U.S. federal income tax return and for certain states’ income tax returns. Net operating losses and certain tax credits generated by us have been utilized by GM; however, income tax expense and deferred tax balances are presented in these financial statements as if we filed our own tax returns in each jurisdiction.

Note 12. Segment Reporting

We offer substantially similar products and services throughout many different regions, subject to local regulations and market conditions. We evaluate our business in two operating segments: the North America Segment and the International Segment. The North America Segment includes our operations in the U.S. and Canada. The International Segment includes our operations in all other countries. Our chief operating decision maker evaluates the operating results and performance of our business based on these operating segments. The management of each segment is responsible for executing our strategies.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

For segment reporting purposes only, interest expense related to the senior notes has been allocated based on targeted leverage for each segment. Interest expense in excess of the targeted overall leverage is reflected in the "Corporate" column below. In addition, the interest income on intercompany loans provided to the international operations is presented in the "Corporate" column as revenue. Key operating data for our operating segments were as follows:

	Three Months Ended March 31, 2017
	North America		International		Corporate		Eliminations		Total
Total revenue	$	2,474	$	405	$	—	$	—	$	2,879
Operating expenses	248		144		—		—		392
Leased vehicle expenses	1,426		12		—		—		1,438
Provision for loan losses	187		30		—		—		217
Interest expense	455		164		—		—		619
Equity income	—		47		—		—		47
Income before income taxes	$	158	$	102	$	—	$	—	$	260

	Three Months Ended March 31, 2016
	North America		International		Corporate			Eliminations		Total
Total revenue	$	1,688	$	387	$	(1	)	$	1	$	2,075
Operating expenses	201		133		—			—		334
Leased vehicle expenses	888		5		—			—		893
Provision for loan losses	177		19		—			—		196
Interest expense	305		157		—			1		463
Equity income	—		36		—			—		36
Income (loss) before income taxes	$	117	$	109	$	(1	)	$	—	$	225

	March 31, 2017						December 31, 2016
	North America		International		Total		North America		International		Total
Finance receivables, net	$	30,618	$	16,292	$	46,910	$	27,617	$	15,573	$	43,190
Leased vehicles, net	$	37,018	$	284	$	37,302	$	34,284	$	242	$	34,526
Total assets	$	74,793	$	19,747	$	94,540	$	68,656	$	19,109	$	87,765

15

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 13. Accumulated Other Comprehensive Loss

	Three Months Ended March 31,
	2017			2016
Unrealized gain on cash flow hedge
Beginning balance	$	17		$	—
Change in value of cash flow hedge, net of tax	(4		)	—
Ending balance	13			—
Defined benefit plans
Beginning balance	(20		)	(13		)
Unrealized gain (loss) on subsidiary pension, net of tax	—			(1		)
Ending balance	(20		)	(14		)
Foreign currency translation adjustment
Beginning balance	(1,235		)	(1,091		)
Translation gain, net of tax	94			153
Ending balance	(1,141		)	(938		)
Total accumulated other comprehensive loss	$	(1,148	)	$	(952	)

Note 14. Regulatory Capital

We are required to comply with a wide variety of laws and regulations. Our International Segment includes the operations of certain stand-alone entities that operate in local markets as either banks or regulated finance companies that are subject to regulatory restrictions. These regulatory restrictions, among other things, require that these entities meet certain minimum capital requirements and may restrict dividend distributions and ownership of certain assets. We were in compliance with all regulatory capital requirements as most recently reported.

Total assets of our regulated international banks and finance companies were approximately $13.1 billion and $12.6 billion at March 31, 2017 and December 31, 2016.

Note 15. Guarantor Condensed Consolidating Financial Statements

The payment of principal and interest on senior notes issued by our top-tier holding company is currently guaranteed solely by AFSI (the Guarantor) and none of our other subsidiaries (the Non-Guarantor Subsidiaries). The Guarantor is a 100% owned consolidated subsidiary and is unconditionally liable for the obligations represented by the senior notes.  The Guarantor’s guarantee may be released only upon customary circumstances, the terms of which vary by issuance.  Customary circumstances include the sale or disposition of all of the Guarantor’s assets or capital stock, the achievement of investment grade rating of the senior notes and legal or covenant defeasance.

The condensed consolidating financial statements present consolidating financial data for (i) General Motors Financial Company, Inc. (on a parent-only basis), (ii) the Guarantor, (iii) the combined Non-Guarantor Subsidiaries and (iv) the parent company and our subsidiaries on a consolidated basis at March 31, 2017 and December 31, 2016, and for the three months ended March 31, 2017 and 2016 (after the elimination of intercompany balances and transactions).

Investments in subsidiaries are accounted for by the parent company using the equity method for purposes of this presentation. Results of operations of subsidiaries are therefore reflected in the parent company's investment accounts and earnings. The principal elimination entries set forth below eliminate investments in subsidiaries and intercompany balances and transactions.

16

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

March 31, 2017

(Unaudited)

	General Motors Financial Company, Inc.			Guarantor			Non- Guarantors			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—		$	2,040		$	654		$	—		$	2,694
Finance receivables, net	—			7,516			39,394			—			46,910
Leased vehicles, net	—			—			37,302			—			37,302
Goodwill	1,095			—			105			—			1,200
Equity in net assets of non-consolidated affiliates	—			—			998			—			998
Property and equipment, net	—			163			128			—			291
Deferred income taxes	613			75			284			(688		)	284
Related party receivables	—			73			544			—			617
Other assets	3			746			3,743			(248		)	4,244
Due from affiliates	26,778			15,992			—			(42,770		)	—
Investment in affiliates	9,401			5,971			—			(15,372		)	—
Total assets	$	37,890		$	32,576		$	83,152		$	(59,078	)	$	94,540
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Secured debt	$	—		$	—		$	42,827		$	(248	)	$	42,579
Unsecured debt	28,573			—			8,797			—			37,370
Accounts payable and accrued expenses	261			330			910			—			1,501
Deferred income	—			—			2,588			—			2,588
Deferred income taxes	—			—			947			(688		)	259
Related party payables	1			—			447			—			448
Other liabilities	63			476			264			—			803
Due to affiliates	—			25,977			16,793			(42,770		)	—
Total liabilities	28,898			26,783			73,573			(43,706		)	85,548
Shareholder's equity
Common stock	—			—			698			(698		)	—
Additional paid-in capital	6,512			79			4,652			(4,731		)	6,512
Accumulated other comprehensive loss	(1,148		)	(157		)	(1,123		)	1,280			(1,148		)
Retained earnings	3,628			5,871			5,352			(11,223		)	3,628
Total shareholder's equity	8,992			5,793			9,579			(15,372		)	8,992
Total liabilities and shareholder's equity	$	37,890		$	32,576		$	83,152		$	(59,078	)	$	94,540

17

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING BALANCE SHEET

December 31, 2016

(Unaudited)

	General Motors Financial Company, Inc.			Guarantor			Non- Guarantors			Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	—		$	2,284		$	917		$	—		$	3,201
Finance receivables, net	—			4,969			38,221			—			43,190
Leased vehicles, net	—			—			34,526			—			34,526
Goodwill	1,095			—			101			—			1,196
Equity in net assets of non-consolidated affiliates	—			—			944			—			944
Property and equipment, net	—			152			127			—			279
Deferred income taxes	502			89			274			(591		)	274
Related party receivables	—			25			485			—			510
Other assets	4			643			3,167			(169		)	3,645
Due from affiliates	24,548			16,065			—			(40,613		)	—
Investment in affiliates	8,986			6,445			—			(15,431		)	—
Total assets	$	35,135		$	30,672		$	78,762		$	(56,804	)	$	87,765
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities
Secured debt	$	—		$	—		$	39,439		$	(169	)	$	39,270
Unsecured debt	26,076			—			8,530			—			34,606
Accounts payable and accrued expenses	302			273			899			—			1,474
Deferred income	—			—			2,365			—			2,365
Deferred income taxes	—			—			811			(591		)	220
Related party payables	1			—			399			—			400
Other liabilities	63			417			257			—			737
Due to affiliates	—			24,437			16,176			(40,613		)	—
Total liabilities	26,442			25,127			68,876			(41,373		)	79,072
Shareholder's equity
Common stock	—			—			698			(698		)	—
Additional paid-in capital	6,505			79			5,345			(5,424		)	6,505
Accumulated other comprehensive loss	(1,238		)	(161		)	(1,223		)	1,384			(1,238		)
Retained earnings	3,426			5,627			5,066			(10,693		)	3,426
Total shareholder's equity	8,693			5,545			9,886			(15,431		)	8,693
Total liabilities and shareholder's equity	$	35,135		$	30,672		$	78,762		$	(56,804	)	$	87,765

18

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended March 31, 2017

(Unaudited)

	General Motors Financial Company, Inc.			Guarantor		Non- Guarantors		Eliminations			Consolidated
Revenue
Finance charge income	$	—		$	95	$	767	$	—		$	862
Leased vehicle income	—			—		1,942		—			1,942
Other income	—			273		1		(199		)	75
Total revenue	—			368		2,710		(199		)	2,879
Costs and expenses
Salaries and benefits	—			163		66		—			229
Other operating expenses	7			44		222		(110		)	163
Total operating expenses	7			207		288		(110		)	392
Leased vehicle expenses	—			—		1,438		—			1,438
Provision for loan losses	—			73		144		—			217
Interest expense	235			33		440		(89		)	619
Total costs and expenses	242			313		2,310		(199		)	2,666
Equity income	315			215		47		(530		)	47
Income before income taxes	73			270		447		(530		)	260
Income tax (benefit) provision	(129		)	26		161		—			58
Net income	$	202		$	244	$	286	$	(530	)	$	202
Comprehensive income	$	292		$	248	$	386	$	(634	)	$	292

19

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING STATEMENT OF INCOME

Three Months Ended March 31, 2016

(Unaudited)

	General Motors Financial Company, Inc.			Guarantor			Non- Guarantors		Eliminations			Consolidated
Revenue
Finance charge income	$	—		$	99		$	719	$	—		$	818
Leased vehicle income	—			—			1,184		—			1,184
Other income	(1		)	205			15		(146		)	73
Total revenue	(1		)	304			1,918		(146		)	2,075
Costs and expenses
Salaries and benefits	—			135			58		—			193
Other operating expenses	(4		)	68			170		(93		)	141
Total operating expenses	(4		)	203			228		(93		)	334
Leased vehicle expenses	—			—			893		—			893
Provision for loan losses	—			103			93		—			196
Interest expense	176			(30		)	370		(53		)	463
Total costs and expenses	172			276			1,584		(146		)	1,886
Equity income	255			168			36		(423		)	36
Income before income taxes	82			196			370		(423		)	225
Income tax (benefit) provision	(82		)	12			131		—			61
Net income	$	164		$	184		$	239	$	(423	)	$	164
Comprehensive income	$	316		$	223		$	398	$	(621	)	$	316

20

GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2017

(Unaudited)

	General Motors Financial Company, Inc.			Guarantor			Non- Guarantors			Eliminations			Consolidated
Net cash (used in) provided by operating activities	$	(273	)	$	103		$	1,586		$	—		$	1,416
Cash flows from investing activities
Purchases of retail finance receivables, net	—			(4,920		)	(3,850		)	2,369			(6,401		)
Principal collections and recoveries on retail finance receivables	—			450			3,145			—			3,595
Proceeds from transfer of retail finance receivables, net	—			2,095			274			(2,369		)	—
Net funding of commercial finance receivables	—			(194		)	(347		)	—			(541		)
Purchases of leased vehicles, net	—			—			(4,794		)	—			(4,794		)
Proceeds from termination of leased vehicles	—			—			1,082			—			1,082
Purchases of property and equipment	—			(19		)	(5		)	—			(24		)
Other investing activities	—			(79		)				79			—
Net change in due from affiliates	(2,230		)	80			—			2,150			—
Net change in investment in affiliates	—			694			—			(694		)	—
Net cash used in investing activities	(2,230		)	(1,893		)	(4,495		)	1,535			(7,083		)
Cash flows from financing activities
Net change in debt (original maturities less than three months)	17			—			(285		)	—			(268		)
Borrowings and issuance of secured debt	—			—			8,440			(79		)	8,361
Payments on secured debt	—			—			(4,805		)	—			(4,805		)
Borrowings and issuance of unsecured debt	2,497			—			471			—			2,968
Payments on unsecured debt	—			—			(574		)	—			(574		)
Debt issuance costs	(11		)	—			(16		)	—			(27		)
Net capital contributions	—			—			(694		)	694			—
Net change in due to affiliates	—			1,546			604			(2,150		)	—
Net cash provided by financing activities	2,503			1,546			3,141			(1,535		)	5,655
Net increase (decrease) in cash, cash equivalents and restricted cash	—			(244		)	232			—			(12		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			—			37			—			37
Cash, cash equivalents and restricted cash at beginning of period	—			2,284			3,018			—			5,302
Cash, cash equivalents and restricted cash at end of period	$	—		$	2,040		$	3,287		$	—		$	5,327

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidating balance sheet:

	General Motors Financial Company, Inc.		Guarantor		Non- Guarantors		Eliminations		Consolidated
Cash and cash equivalents	$	—	$	2,040	$	654	$	—	$	2,694
Restricted cash included in other assets	—		—		2,633		—		2,633
Total	$	—	$	2,040	$	3,287	$	—	$	5,327

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GENERAL MOTORS FINANCIAL COMPANY, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS

Three Months Ended March 31, 2016

(Unaudited)

	General Motors Financial Company, Inc.			Guarantor			Non- Guarantors			Eliminations			Consolidated
Net cash (used in) provided by operating activities	$	(144	)	$	(537	)	$	1,839		$	—		$	1,158
Cash flows from investing activities
Purchases of retail finance receivables, net	—			(4,466		)	(4,388		)	4,689			(4,165		)
Principal collections and recoveries on retail finance receivables	—			359			2,912			—			3,271
Proceeds from transfer of retail finance receivables, net	—			2,866			1,823			(4,689		)	—
Net funding of commercial finance receivables	—			(227		)	(797		)	—			(1,024		)
Purchases of leased vehicles, net	—			—			(5,158		)	—			(5,158		)
Proceeds from termination of leased vehicles	—			—			481			—			481
Purchases of property and equipment	—			(15		)	(5		)	—			(20		)
Other investing activities	—			(60		)	1			60			1
Net change in due from affiliates	(2,587		)	(1,208		)	—			3,795			—
Net change in investment in affiliates	—			336			—			(336		)	—
Net cash used in investing activities	(2,587		)	(2,415		)	(5,131		)	3,519			(6,614		)
Cash flows from financing activities
Net change in debt (original maturities less than three months)	—			—			757			—			757
Borrowings and issuance of secured debt	—			—			7,114			(60		)	7,054
Payments on secured debt	—			—			(5,251		)	—			(5,251		)
Borrowings and issuance of unsecured debt	2,744			—			387			—			3,131
Payments on unsecured debt	—			—			(241		)	—			(241		)
Debt issuance costs	(13		)	—			(13		)	—			(26		)
Net capital contributions	—			—			(336		)	336			—
Net change in due to affiliates	—			2,732			1,063			(3,795		)	—
Net cash provided by financing activities	2,731			2,732			3,480			(3,519		)	5,424
Net increase (decrease) in cash, cash equivalents, and restricted cash	—			(220		)	188			—			(32		)
Effect of foreign exchange rate changes on cash, cash equivalents and restricted cash	—			—			58			—			58
Cash, cash equivalents and restricted cash at beginning of period	—			2,319			2,683			—			5,002
Cash, cash equivalents and restricted cash at end of period	$	—		$	2,099		$	2,929		$	—		$	5,028

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GENERAL MOTORS FINANCIAL COMPANY, INC.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Basis of Presentation This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) should be read in conjunction with the accompanying condensed consolidated financial statements and the audited consolidated financial statements and notes thereto included in our 2016 Form 10-K.

Forward-looking statements in this MD&A are not guarantees of future performance and may involve risks and uncertainties that could cause actual results to differ materially from those projected. Refer to the "Forward-Looking Statements" section of this MD&A and the "Risk Factors" section of our 2016 Form 10-K for a discussion of these risks and uncertainties. Except as otherwise specified, dollar amounts presented within tables are stated in millions.

Retail Our retail automobile finance programs in the North America Segment include full-spectrum lending and leasing offered through GM-franchised dealers under the "GM Financial" brand. We also offer a sub-prime lending product through non-GM-franchised and select independent dealers under the "AmeriCredit" brand. Our sub-prime lending program is designed to serve customers who have limited access to automobile financing through banks and credit unions. We therefore generally charge higher rates than those charged by banks and credit unions and expect to sustain a higher level of credit losses than on prime lending. We finance new GM vehicles, moderately-priced new vehicles from other manufacturers, and later-model, low mileage used vehicles.

The retail lending and leasing programs in our International Segment focus on financing new GM vehicles and select used vehicles, predominantly for customers with prime credit scores. We also offer finance and/or car-related insurance products through third parties, such as payment protection insurance, gap, extended warranty, and motor insurance.

We have expanded our leasing and prime lending programs through GM-franchised dealerships in the U.S.; therefore, leasing and prime lending have become a larger percentage of our originations and retail portfolio balance. We have been the exclusive subvented lease provider for GM in the U.S. since April 2015 and the exclusive subvented loan provider for GM in the U.S. since January 2016. We define prime lending as lending to customers with FICO scores or equivalents of 680 and greater, near-prime lending as lending to customers with FICO scores or equivalents of 620 to 679, and sub-prime lending as lending to customers with FICO scores or equivalents of less than 620. The following table presents our retail loan and lease originations in the North America Segment by FICO score band or equivalents:

	Three Months Ended March 31,
	2017				2016
	Amount		Percentage		Amount		Percentage
Prime	$	8,253	74.5	%	$	6,347	68.3	%
Near-prime	1,245		11.2		1,241		13.3
Sub-prime	1,579		14.3		1,712		18.4
Total originations	$	11,077	100.0	%	$	9,300	100.0	%

The following table summarizes the residual value as well as the number of units included in leased vehicles, net by vehicle type (units in thousands):

	March 31, 2017					December 31, 2016
	Residual Value		Units	Percentage		Residual Value		Units	Percentage
Cars	$	5,738	455	31.4	%	$	5,341	430	32.2	%
Trucks	5,669		239	16.5		5,236		224	16.8
CUVs	11,437		675	46.5		10,366		606	45.4
SUVs	3,060		82	5.6		2,791		75	5.6
Total	$	25,904	1,451	100.0	%	$	23,734	1,335	100.0	%

We expect used car prices to decline approximately 7% during 2017 as compared to 2016 and expect potential further moderation in 2018 due primarily to an increased supply of used vehicles. We are currently experiencing weaker residual values, especially in the crossover segment. We continue to expect pre-tax income to double from 2014 earnings of $815 million once full captive penetration levels are achieved.

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GENERAL MOTORS FINANCIAL COMPANY, INC.

The following table summarizes additional information for operating leases (in thousands):

	Three Months Ended March 31,
	2017		2016
Operating leases originated(a)	174		187
Operating leases terminated(b)	59		26
Operating lease vehicles returned(c)	38		13
Return rate(d)	64	%	48	%

________________ 

(a) Operating leases originated represents the number of operating leases we purchase during a given period.

(b) Operating leases terminated represents the number of vehicles for which the lease has ended during a given period.

(c) Operating lease vehicles returned represents the number of vehicles returned to us for remarketing at the end of the lease term.

(d) Return rates are calculated as the number of operating leases returned divided by the number of operating leases terminated.

Operating leases terminated and operating lease vehicles returned increased due to the growth and maturity of the lease portfolio. Due to the current age and size of our lease portfolio, the current return rate is lower than we expect it to be in future periods as our lease portfolio grows and matures.

Commercial Our commercial lending programs are offered primarily to our GM-franchised dealer customers and their affiliates. Commercial lending products include floorplan financing, also known as wholesale or inventory financing, which is lending to finance vehicle inventory, as well as dealer loans, which are loans to finance improvements to dealership facilities, to provide working capital, and to purchase and/or finance dealership real estate. Other commercial products include financing for parts and accessories, dealer fleets and storage centers.

Financing We primarily finance our loan, lease and commercial origination volume through the use of our secured and unsecured credit facilities, through public and private securitization transactions where such markets are developed, through the issuance of unsecured debt in the public markets and by accepting deposits from retail banking customers in Germany. Generally, we seek to fund our operations through local sources of funding to minimize currency and country risk, although we may issue debt globally in order to enhance funding source diversification and support financing needs for the U.S. As such, the mix of funding sources varies from country to country, based on the characteristics of our earning assets and the relative development of the capital markets in each country. Our operations in the U.S., Canada, Latin America and China are generally funded locally. Our European operations obtain most of their funding from local sources and also borrow funds from affiliated companies. We actively monitor the capital markets and seek to optimize our mix of funding sources and our cost of funds.

PSA Transaction On March 5, 2017, GM through a wholly-owned subsidiary (the Seller), entered into a Master Agreement with Peugeot, S.A. (PSA Group) pursuant to which PSA Group will acquire GM's Opel and Vauxhall businesses and certain other assets in Europe (the Opel/Vauxhall Business) and certain of our European subsidiaries and branches (European Operations, together with the Opel/Vauxhall Business, the Transferred Business), as described in Note 2 - "Disposition of Business" to our condensed consolidated financial statements.

The net consideration to be paid for our European Operations will be 0.8 times their book value at closing, which we estimate will be approximately $1 billion, denominated in Euros. The purchase price is subject to certain adjustments as provided in the Agreement. We expect to recognize a disposal loss of approximately $700 million to $800 million at closing.

The transfer of the Transferred Business is subject to the satisfaction of various closing conditions, including receipt of necessary antitrust, financial and other regulatory approvals, the reorganization of the Transferred Business, including pension plans in the United Kingdom, the completion of the contribution or sale by Adam Opel AG of its assets and liabilities to a subsidiary, the transfer of GMAC UK plc’s interest in SAIC-GMAC Automotive Finance Company Limited to us or an alternate entity designated by the Seller, unless either party elects to close without completion of the transfer, and the continued accuracy, subject to certain exceptions, at closing of certain of the Seller’s representations and warranties. There can be no assurance that all required governmental consents or clearances will be obtained or that the other closing conditions will be satisfied. The transfer of the Opel/Vauxhall Business is expected to close by the end of 2017 and the transfer of our European Operations is expected to close as soon as practicable after the receipt of necessary antitrust, financial and other regulatory approvals, which may be after the transfer of the Opel/Vauxhall Business, but not before. The transfer of our European Operations will not occur unless the transfer of the Opel/Vauxhall Business occurs.

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GENERAL MOTORS FINANCIAL COMPANY, INC.

Our principal focus is on expanding our business in the U.S. to reach full captive penetration levels; therefore, we do not expect that the sale of our European Operations will have a material adverse effect on our consolidated results of operations, financial condition, liquidity or financing strategies, including the mix of secured and unsecured debt issuances. We also do not expect that sale of our European Operations will result in a material increase in our ratio of total debt to total equity or our earning assets leverage ratio as calculated under our Support Agreement with GM. Due to the size of the prime retail loan portfolio held by our European Operations, we expect that, for a period of time following the sale, retail operating leases will make up a greater percentage of our earning assets than they have historically. As our U.S. operations increase purchases of prime retail loans, we expect that our earning asset mix will return to more recent historical levels. We may make a special dividend over time to GM following the completion of the sale.

Results of Operations

In our tabular presentation of the changes in results between financial periods, we provide the following information:  (i) the amount of change excluding the impact of foreign currency translation (“FX”); (ii) the amount of the impact of foreign currency translation; and (iii) the total change. The amount of the impact of foreign currency translation is derived by translating current year results at the average of prior year exchange rates, and is driven by the change in the U.S. Dollar against the currencies used by our foreign operations. We believe the amount of change excluding the foreign currency translation impact facilitates a better comparison of results. In our discussion below, we discuss changes in relevant items excluding any foreign currency translation impact. Average balances are calculated using daily balances, where available. Otherwise average balances are calculated using monthly ending balances.

Three Months Ended March 31, 2017 compared to Three Months Ended March 31, 2016

Average Earning Assets

	Three Months Ended March 31,
	2017						2016						2017 vs. 2016
	North America		International		Total		North America		International		Total		Change excluding FX			FX			Total change			%
Average retail finance receivables	$	22,698	$	11,395	$	34,093	$	18,622	$	10,963	$	29,585	$	4,837		$	(329	)	$	4,508		15.2	%
Average commercial finance receivables	6,635		4,533		11,168		4,109		4,510		8,619		2,761			(212		)	2,549			29.6	%
Average finance receivables	29,333		15,928		45,261		22,731		15,473		38,204		7,598			(541		)	7,057			18.5	%
Average leased vehicles, net	35,687		262		35,949		22,190		97		22,287		13,627			35			13,662			61.3	%
Average earning assets	$	65,020	$	16,190	$	81,210	$	44,921	$	15,570	$	60,491	$	21,225		$	(506	)	$	20,719		34.3	%
Retail finance receivables purchased	$	4,817	$	1,697	$	6,514	$	2,580	$	1,563	$	4,143	$	2,441		$	(70	)	$	2,371		57.2	%
Average new retail loan size (in dollars)	$	27,095	$	11,425			$	27,470	$	11,425
Leased vehicles purchased	$	6,260	$	53	$	6,313	$	6,720	$	32	$	6,752	$	(443	)	$	4		$	(439	)	(6.5	)%
Average new lease size (in dollars)	$	36,514	$	21,124			$	36,270	$	20,020

Average finance receivables increased in the North America Segment as a result of the continued increase of our share of GM's business in that segment. The increase in average leased vehicles, net primarily resulted from our exclusive lease subvention arrangement in the U.S. with GM.

In the North America Segment, the average annual percentage rate for retail finance receivables purchased during the three months ended March 31, 2017 decreased to 6.5% from 7.7% during the prior period due primarily to the expansion of our prime lending program and our exclusive loan subvention arrangement in the U.S. with GM.

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GENERAL MOTORS FINANCIAL COMPANY, INC.

Revenue

	Three Months Ended March 31,
	2017									2016									2017 vs. 2016
	North America			International			Total			North America			International			Total			Change excluding FX		FX			Total change		%
Finance charge income
Retail finance receivables	$	466		$	269		$	735		$	453		$	260		$	713		$	10	$	12		$	22	3.1	%
Commercial finance receivables	$	55		$	72		$	127		$	32		$	73		$	105		$	23	$	(1	)	$	22	21.0	%
Leased vehicle income	$	1,926		$	16		$	1,942		$	1,178		$	6		$	1,184		$	754	$	4		$	758	64.0	%
Other income	$	27		$	48		$	75		$	25		$	48		$	73		$	—	$	2		$	2	2.7	%
Effective yield - retail finance receivables	8.3		%	9.6		%	8.7		%	9.8		%	9.5		%	9.7		%
Effective yield - commercial finance receivables	3.4		%	6.4		%	4.6		%	3.1		%	6.5		%	4.9		%

In the North America Segment, finance charge income on retail finance receivables increased slightly for the three months ended March 31, 2017, compared to the three months ended March 31, 2016, due to growth in the portfolio, substantially offset by a decrease in effective yield. The effective yield on our retail finance receivables decreased due primarily to a decrease in the average annual percentage rate on new originations as we have increased our prime lending. The effective yield represents finance charges and fees recorded in earnings during the period as a percentage of average retail finance receivables. The effective yield, as a percentage of average retail finance receivables, is higher than the contractual rates of our auto finance contracts primarily because the effective yield includes, in addition to the contractual rates and fees, the impact of rate subvention provided by GM.

The increase in leased vehicle income reflects the increase in the size of the leased asset portfolio.

Costs and Expenses

	Three Months Ended March 31,
	2017									2016									2017 vs. 2016
	North America			International			Total			North America			International			Total			Change excluding FX		FX			Total change		%
Operating expenses	$	248		$	144		$	392		$	201		$	133		$	334		$	58	$	—		$	58	17.4	%
Leased vehicle expenses	$	1,426		$	12		$	1,438		$	888		$	5		$	893		$	542	$	3		$	545	61.0	%
Provision for loan losses	$	187		$	30		$	217		$	177		$	19		$	196		$	21	$	—		$	21	10.7	%
Interest expense(a)	$	455		$	164		$	619		$	305		$	158		$	463		$	145	$	11		$	156	33.7	%
Average debt outstanding	$	62,167		$	14,170		$	76,337		$	43,101		$	13,654		$	56,755		$	19,923	$	(341	)	$	19,582	34.5	%
Effective rate of interest on debt	3.0		%	4.7		%	3.3		%	2.8		%	4.7		%	3.3		%

(a) During 2016, amounts do not reflect allocation of senior note interest expense, and therefore do not agree with amounts presented in Note 12 - "Segment Reporting" in our condensed consolidated financial statements in this Form 10-Q.

Operating Expenses The increase in operating expenses relates to the growth in earning assets and investments to support the prime lending program and enhance lease origination and servicing capabilities in the North America Segment. Operating expenses as an annualized percentage of average earning assets decreased to 2.0% from 2.2% for the three months ended March 31, 2017 and 2016, due primarily to efficiency gains achieved through higher earning asset levels.

Leased Vehicle Expenses Leased vehicle expenses, which are primarily comprised of depreciation of leased vehicles, increased due to the growth of the leased asset portfolio.

Provision for Loan Losses The provision for retail loan losses increased due primarily to the growth in the retail finance receivables portfolio. As an annualized percentage of average retail finance receivables, the provision for retail loan losses decreased to 2.5% for the three months ended March 31, 2017 from 2.7% for the three months ended March 31, 2016, due primarily to a

26

GENERAL MOTORS FINANCIAL COMPANY, INC.

shift in the credit mix of the portfolio to a larger percentage of prime loans. The provision for commercial loan losses was insignificant for the three months ended March 31, 2017 and 2016.

Interest Expense Interest expense increased due primarily to an increase in the average debt outstanding resulting from growth in the loan and lease portfolios.

Taxes Our consolidated effective income tax rate was 27.2% and 32.3% of income before income taxes and equity income for the three months ended March 31, 2017 and 2016. The decrease in the effective tax rate is due primarily to reduced tax expense attributable to entities included in our effective tax rate calculation and an increase in certain U.S. tax credits.

Other Comprehensive Income

Foreign Currency Translation Adjustment Foreign currency translation adjustments included in other comprehensive income were $94 million and $153 million for the three months ended March 31, 2017 and 2016. Most of the international operations use functional currencies other than the U.S. Dollar. Translation adjustments result from changes in the values of our international currency-denominated assets and liabilities as the value of the U.S. Dollar changes in relation to international currencies.

Credit Quality

Retail Finance Receivables	March 31, 2017									December 31, 2016
	North America			International			Total			North America			International			Total
Retail finance receivables, net of fees	$	24,354		$	11,650		$	36,004		$	21,786		$	11,124		$	32,910
Less: allowance for loan losses	(718		)	(134		)	(852		)	(666		)	(127		)	(793		)
Retail finance receivables, net	$	23,636		$	11,516		$	35,152		$	21,120		$	10,997		$	32,117
Number of outstanding contracts	1,199,487			1,622,179			2,821,666			1,097,207			1,611,276			2,708,483
Average amount of outstanding contracts (in dollars)(a)	$	20,304		$	7,182		$	12,760		$	19,856		$	6,904		$	12,151
Allowance for loan losses as a percentage of retail finance receivables, net of fees	2.9		%	1.2		%	2.4		%	3.1		%	1.1		%	2.4		%

_________________ 

(a) Average amount of outstanding contracts consists of retail finance receivables, net of fees, divided by number of outstanding contracts.

At March 31, 2017, the allowance for loan losses for the North America Segment as a percentage of retail finance receivables, net of fees, decreased from the level at December 31, 2016 consistent with the improved credit mix in our portfolio resulting from our expansion of prime lending.

Delinquency The following is a summary of the contractual amounts of delinquent retail finance receivables, which is not materially different than recorded investment that are (i) more than 30 days delinquent, but not yet in repossession and (ii) in repossession, but not yet charged off:

	March 31, 2017								March 31, 2016
	North America		International		Total		Percent of Contractual Amount Due		North America		International		Total		Percent of Contractual Amount Due
31 - 60 days	$	883	$	123	$	1,006	2.8	%	$	841	$	122	$	963	3.1	%
Greater than 60 days	313		128		441		1.2		312		109		421		1.4
Total finance receivables more than 30 days delinquent	1,196		251		1,447		4.0		1,153		231		1,384		4.5
In repossession	43		8		51		0.1		41		7		48		0.2
Total finance receivables more than 30 days delinquent or in repossession	$	1,239	$	259	$	1,498	4.1	%	$	1,194	$	238	$	1,432	4.7	%

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GENERAL MOTORS FINANCIAL COMPANY, INC.

Deferrals In accordance with our policies and guidelines in the North America Segment, we, at times, offer payment deferrals to retail customers, whereby the borrower is allowed to move up to two delinquent payments to the end of the loan generally by paying a fee (approximately the interest portion of the payment deferred, except where state law provides for a lesser amount). Our policies and guidelines limit the number and frequency of deferments that may be granted. Additionally, we generally limit the granting of deferments on new accounts until a requisite number of payments have been received. Contracts receiving a payment deferral as an average quarterly percentage of average retail finance receivables outstanding were 4.3% and 5.1% for the three months ended March 31, 2017 and 2016. Deferrals in the International Segment are insignificant.

Troubled Debt Restructurings Refer to Note 4 - "Finance Receivables" to our condensed consolidated financial statements for further discussion of TDRs.

Net Charge-offs The following table presents charge-off data with respect to our retail finance receivables portfolio:

	Three Months Ended March 31,
	2017									2016
	North America			International			Total			North America			International			Total
Charge-offs	$	266		$	41		$	307		$	259		$	34		$	293
Less: recoveries	(135		)	(12		)	(147		)	(139		)	(11		)	(150		)
Net charge-offs	$	131		$	29		$	160		$	120		$	23		$	143
Net charge-offs as an annualized percentage(a)	2.3		%	1.0		%	1.9		%	2.6		%	0.8		%	1.9		%
Recovery percentage(b)	51.6		%							54.1		%

_________________ 

(a) Net charge-offs as an annualized percentage is calculated as a percentage of average retail finance receivables.

(b) Recovery percentage is a percentage of gross repossession charge-offs. Charge-offs for the International Segment primarily include the write-down of receivables to net realizable value. As a result, a calculation of recoveries as a percentage of gross charge-offs is not meaningful. The decrease in the recovery rate for North America reflects moderation in used car prices, due primarily to an increase in supply.

Commercial Finance Receivables	March 31, 2017									December 31, 2016
	North America			International			Total			North America			International			Total
Commercial finance receivables, net of fees	$	7,016		$	4,796		$	11,812		$	6,527		$	4,596		$	11,123
Less: allowance for loan losses	(34		)	(20		)	(54		)	(30		)	(20		)	(50		)
Total commercial finance receivables, net	$	6,982		$	4,776		$	11,758		$	6,497		$	4,576		$	11,073
Number of dealers	829			2,138			2,967			792			2,150			2,942
Average carrying amount per dealer	$	8		$	2		$	4		$	8		$	2		$	4
Allowance for loan losses as a percentage of commercial finance receivables, net of fees	0.5		%	0.4		%	0.5		%	0.5		%	0.4		%	0.4		%

There were insignificant charge-offs of commercial finance receivables during the three months ended March 31, 2017 and none during the three months ended March 31, 2016. At March 31, 2017 and December 31, 2016, substantially all of our commercial finance receivables were current with respect to payment status and none were classified as TDRs.

Leased VehiclesAt March 31, 2017 and 2016, 99.2% and 99.1% of our operating leases were current with respect to payment status.

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GENERAL MOTORS FINANCIAL COMPANY, INC.

Liquidity and Capital Resources

GeneralOur primary sources of cash are finance charge income, leasing income and proceeds from the sale of terminated leased vehicles, servicing fees, net distributions from secured debt facilities, including securitizations, secured and unsecured borrowings and collections and recoveries on finance receivables. Our primary uses of cash are purchases of retail finance receivables and leased vehicles, the funding of commercial finance receivables, repayment of secured and unsecured debt, funding credit enhancement requirements in connection with securitizations and secured credit facilities, operating expenses and interest costs.

In the North America Segment, our purchase and funding of retail and commercial finance receivables and leased vehicles are financed initially utilizing cash and borrowings on our secured credit facilities. Subsequently, our strategy is to obtain long-term financing for finance receivables and leased vehicles through securitization transactions and the issuance of unsecured debt.

In the International Segment, our purchase and funding of finance receivables are typically financed with borrowings on secured and unsecured credit facilities. In certain countries where the debt capital and securitization markets are sufficiently developed, such as in Germany and the U.K., we obtain long-term financing through securitization transactions. In addition, we raise unsecured debt in the international capital markets through the issuance of notes under our Euro medium term note program and accept deposits from retail banking customers in Germany.

Cash Flow During the three months ended March 31, 2017, net cash provided by operating activities increased due primarily to increased lease vehicle income resulting from growth in the leased vehicle portfolio, partially offset by increased interest expense and increased operating expenses.

During the three months ended March 31, 2017, net cash used in investing activities increased due to an increase in net purchases of retail finance receivables of $2.2 billion, partially offset by a decrease in purchases of leased vehicles of $364 million, a decrease in net fundings of commercial finance receivables of $483 million, increased collections on retail finance receivables of $324 million, and an increase in proceeds received on terminated leases of $601 million.

During the three months ended March 31, 2017, net cash provided by financing activities increased due primarily to an increase in borrowings, net of repayments, of $231 million.

Liquidity	March 31, 2017		December 31, 2016
Cash and cash equivalents(a)	$	2,694	$	3,201
Borrowing capacity on unpledged eligible assets	8,268		9,506
Borrowing capacity on committed unsecured lines of credit	421		445
Borrowing capacity on the Junior Subordinated Revolving Credit Facility	1,000		1,000
Available liquidity	$	12,383	$	14,152

_________________

(a) Includes $585 million and $839 million in unrestricted cash outside of the U.S. at March 31, 2017 and December 31, 2016. This cash is considered to be indefinitely invested based on specific plans for reinvestment of these earnings.

During the three months ended March 31, 2017, available liquidity decreased due primarily to increased credit facility utilization due to asset growth, which lowers borrowing capacity.

We have the ability to borrow up to $1.0 billion under GM's three-year, $4.0 billion unsecured revolving credit facility and up to $3.0 billion under GM's five-year, $10.5 billion unsecured revolving credit facility, subject to available capacity. Our borrowings under GM's facilities are limited by GM's ability to borrow the entire amount available under the facilities. Therefore, we may be able to borrow up to $4.0 billion in total or may be unable to borrow depending on GM's borrowing activity. If we do borrow under these facilities, we expect such borrowings would be short-term in nature and, except in extraordinary circumstances, would not be used to fund our operating activities in the ordinary course of business. Neither we, nor any of our subsidiaries, guarantee any obligations under these facilities and none of our assets secure these facilities. Liquidity available to us under the GM unsecured revolving credit facilities is not included in the table above. At March 31, 2017, we had no amounts borrowed under either of GM's unsecured revolving credit facilities.

Credit FacilitiesIn the normal course of business, in addition to using our available cash, we utilize borrowings under our credit facilities, which may be secured and/or structured as securitizations, or may be unsecured, and we repay these borrowings as appropriate under our liquidity management strategy.

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At March 31, 2017, credit facilities consist of the following:

Facility Type	Facility Amount		Advances Outstanding
Revolving retail asset-secured facilities(a)	$	21,773	$	11,459
Revolving commercial asset-secured facilities(b)	4,312		406
Total secured	26,085		11,865
Unsecured committed facilities(c)	1,370		949
Unsecured uncommitted facilities(d)	2,504		2,504
Total unsecured	3,874		3,453
Junior Subordinated Revolving Credit Facility	1,000		—
Total	$	30,959	$	15,318

_________________

(a) Includes committed and uncommitted revolving credit facilities backed by retail finance receivables and leases. The financial institutions providing the uncommitted facilities are not contractually obligated to advance funds under them.  We had $270 million in advances outstanding and $720 million in unused borrowing capacity on these facilities at March 31, 2017.

(b) Includes revolving credit facilities backed by loans to dealers for floorplan financing.

(c) Does not include $4.0 billion in liquidity available to us under GM's unsecured revolving credit facilities.

(d) The financial institutions providing the uncommitted facilities are not contractually obligated to advance funds under them. We had $1.2 billion in unused borrowing capacity on these facilities at March 31, 2017.

Refer to Note 8 - "Debt" to our consolidated financial statements in our Form 10-K for further discussion of the terms of our revolving credit facilities.

Securitization Notes PayableWe periodically finance our retail and commercial finance receivables and leases through public and private term securitization transactions, where the securitization markets are sufficiently developed. A summary of securitization notes payable is as follows:

Year of Transaction	Maturity Date(a)			Original Note Issuance(b)		Note Balance At March 31, 2017
2012	February 2020	-	May 2020	$	2,300	$	241
2013	July 2020	-	October 2021	$	5,058	874
2014	April 2019	-	September 2022	$	10,005	2,870
2015	July 2019	-	December 2023	$	14,348	8,125
2016	April 2018	-	November 2024	$	17,786	14,718
2017	January 2020	-	February 2025	$	4,003	3,950
Total active securitizations						30,778
Debt issuance costs						(64		)
Total						$	30,714

_________________ 

(a) Maturity dates represent legal final maturity of issued notes. The notes are expected to be paid based on amortization of the finance receivables and leases pledged.

(b) At historical foreign currency exchange rates at the time of issuance.

Our securitizations utilize special purpose entities which are also VIEs that meet the requirements to be consolidated in our financial statements. Refer to Note 8 - "Variable Interest Entities" to our condensed consolidated financial statements in this Form 10-Q for further discussion.

Senior Notes, Retail Customer Deposits and Other Unsecured Debt We periodically access the debt capital markets through the issuance of senior unsecured notes, predominantly from registered shelves in the U.S. and Europe. At March 31, 2017, the par value of our outstanding senior notes was $31.5 billion.

We issue other unsecured debt through commercial paper offerings and other non-bank funding sources primarily in the International Segment. At March 31, 2017 we had $916 million of this type of unsecured debt outstanding. We accept deposits

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from retail banking customers in Germany. At March 31, 2017, the outstanding balance of these deposits was $1.9 billion, of which 41% were overnight deposits.

Support Agreement At March 31, 2017, our earning assets leverage ratio was 10.9, and the applicable ratio was 11.5.

Forward-Looking Statements

This report contains several "forward-looking statements." Forward-looking statements are those that use words such as "believe," "expect," "intend," "plan," "may," "likely," "should," "estimate," "continue," "future" or "anticipate" and other comparable expressions. These words indicate future events and trends. Forward-looking statements are our current views with respect to future events and financial performance. These forward-looking statements are subject to many assumptions, risks and uncertainties that could cause actual results to differ significantly from historical results or from those anticipated by us. The most significant risks are detailed from time to time in our filings and reports with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2016. It is advisable not to place undue reliance on our forward-looking statements. We undertake no obligation to, and do not, publicly update or revise any forward-looking statements, except as required by federal securities laws, whether as a result of new information, future events or otherwise.

The following factors are among those that may cause actual results to differ materially from historical results or from the forward-looking statements:

• GM's ability to sell new vehicles that we finance in the markets we serve in North America, Latin America, China and Europe, particularly in the U.K. where automobile sales may be negatively impacted due to the passage of the referendum to discontinue its membership in the European Union;

• the viability of GM-franchised dealers that are commercial loan customers;

• the availability and cost of sources of financing;

• the level of net charge-offs, delinquencies and prepayments on the loans and leases we originate;

• the effect, interpretation or application of new or existing laws, regulations, court decisions and accounting pronouncements;

• the prices at which used cars are sold in the wholesale auction markets;

• vehicle return rates and the residual value performance on vehicles we lease;

• interest rate and currency exchange rate fluctuations;

• our financial condition and liquidity, as well as future cash flows and earnings;

• changes in general economic and business conditions;

• competition;

• our ability to manage risks related to security breaches and other disruptions to our networks and systems;

• changes in business strategy, including expansion of product lines and credit risk appetite, acquisitions and divestitures; and

• risks and uncertainties associated with the consummation of the sale of the Transferred Business to the PSA Group, including satisfaction of the closing conditions.

If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those expected, estimated or projected.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes in our exposure to market risk since December 31, 2016. Refer to Item 7A - "Quantitative and Qualitative Disclosures About Market Risk" in our 2016 Form 10-K.

Item 4. Controls and Procedures

Disclosure Controls and Procedures We maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and accumulated and communicated to our management, including our principal executive officer (CEO) and principal financial officer (CFO), as appropriate to allow timely decisions regarding required disclosure.

Our management, with the participation of our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) promulgated under the Exchange Act) at March 31, 2017. Based on this

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evaluation, required by paragraph (b) of Rule 13a-15 and/or 15d-15, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2017.

Changes in Internal Control Over Financial Reporting There have not been any changes in our internal control over financial reporting during the three months ended March 31, 2017, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

Item 1. Legal Proceedings

Refer to Note 10 -"Commitments and Contingencies" to our condensed consolidated financial statements for information relating to certain legal proceedings.

Item 1A. Risk Factors

We face a number of significant risks and uncertainties in connection with our operations. Our business, results of operations and financial condition could be materially adversely affected by these risks factors. There have been no material changes to the Risk Factors disclosed in our 2016 Form 10-K.

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GENERAL MOTORS FINANCIAL COMPANY, INC.

Item 6. Exhibits

2.1*	Master Agreement, dated as of March 5, 2017, between General Motors Holdings LLC and Peugeot S.A.*	Filed Herewith
3.1	Certificate of Amendment to the Amended and Restated Certificate of Formation of General Motors Financial Company, Inc.	Filed Herewith
31.1	Officers' Certifications of Periodic Report pursuant to Section 302 of Sarbanes-Oxley Act of 2002	Filed Herewith
32.1	Officers' Certifications of Periodic Report pursuant to Section 906 of Sarbanes-Oxley Act of 2002	Furnished with this Report
101.INS	XBRL Instance Document	Filed Herewith
101.SCH	XBRL Taxonomy Extension Schema Document	Filed Herewith
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document	Filed Herewith
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document	Filed Herewith
101.LAB	XBRL Taxonomy Extension Label Linkbase Document	Filed Herewith
101.PRE	XBRL Taxonomy Presentation Linkbase Document	Filed Herewith

__________

* The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the Securities and Exchange Commission upon request.

Instruments defining the rights of holders of certain issues of long-term debt of General Motors Financial Company, Inc. have not been filed as exhibits because the authorized principal amount of any one of such issues does not exceed 10% of the total assets of General Motors Financial Company, Inc. General Motors Financial Company, Inc. will furnish a copy of each such instrument to the SEC upon request.

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GENERAL MOTORS FINANCIAL COMPANY, INC.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			General Motors Financial Company, Inc.
			(Registrant)
Date:	April 28, 2017	By:	/S/    CHRIS A. CHOATE
			(Signature)
			Chris A. Choate
			Executive Vice President and
			Chief Financial Officer

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