GM Financial Receivables and Transactions



	June 30, 2018									December 31, 2017
	Retail			Commercial			Total			Retail			Commercial			Total
Finance receivables, collectively evaluated for impairment, net of fees	$	33,278		$	10,273		$	43,551		$	30,486		$	9,935		$	40,421
Finance receivables, individually evaluated for impairment, net of fees	2,277			46			2,323			2,228			22			2,250
GM Financial receivables	35,555			10,319			45,874			32,714			9,957			42,671
Less: allowance for loan losses	(815		)	(58		)	(873		)	(889		)	(53		)	(942		)
GM Financial receivables, net	$	34,740		$	10,261		$	45,001		$	31,825		$	9,904		$	41,729

Fair value of GM Financial receivables							$	44,629								$	41,735

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.



	Three Months Ended						Six Months Ended
	June 30, 2018			June 30, 2017			June 30, 2018			June 30, 2017
Allowance for loan losses at beginning of period	$	912		$	867		$	942		$	805
Provision for loan losses	128			158			264			369
Charge-offs	(298		)	(273		)	(593		)	(571		)
Recoveries	145			142			268			285
Effect of foreign currency	(14		)	(1		)	(8		)	5
Allowance for loan losses at end of period	$	873		$	893		$	873		$	893

The allowance for loan losses on retail and commercial finance receivables included a collective allowance of $560 million and $611 million and a specific allowance of $313 million and $331 million at June 30, 2018 and December 31, 2017.

Retail Finance Receivables We use proprietary scoring systems in the underwriting process that measure the credit quality of retail finance 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. Subsequent to origination we review the credit quality of retail finance receivables based on customer payment activity. At June 30, 2018 and December 31, 2017, 29% and 33% of retail finance receivables were from consumers with sub-prime credit scores, which are defined as FICO scores or equivalent scores of less than 620 at the time of loan origination.

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date the payment was contractually due. The accrual of finance charge income had been suspended on delinquent retail finance receivables with contractual amounts due of $822 million and $778 million at June 30, 2018 and December 31, 2017. The following table summarizes the contractual amount of delinquent retail finance receivables, which is not significantly different than the recorded investment of the retail finance receivables:



	June 30, 2018				June 30, 2017
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31-to-60 days delinquent	$	1,178	3.3	%	$	1,076	3.4	%
Greater-than-60 days delinquent	462		1.3	%	464		1.5	%
Total finance receivables more than 30 days delinquent	1,640		4.6	%	1,540		4.9	%
In repossession	57		0.2	%	43		0.2	%
Total finance receivables more than 30 days delinquent or in repossession	$	1,697	4.8	%	$	1,583	5.1	%

Retail finance receivables classified as troubled debt restructurings and individually evaluated for impairment were $2.3 billion and $2.2 billion and the allowance for loan losses included $307 million and $328 million of specific allowances on these receivables at June 30, 2018 and December 31, 2017.

Commercial Finance Receivables Our commercial finance receivables consist of dealer financings, primarily for inventory purchases. A proprietary model is used to assign a risk rating to each dealer. 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 restrictions on funding, including suspension of lines of credit and liquidation of assets. The commercial finance receivables on non-accrual status were insignificant at June 30, 2018 and December 31, 2017. The following table summarizes the credit risk profile by dealer risk rating of the commercial finance receivables:



		June 30, 2018		December 31, 2017
Group I	– Dealers with superior financial metrics	$	1,945	$	1,915
Group II	– Dealers with strong financial metrics	3,939		3,465
Group III	– Dealers with fair financial metrics	2,992		3,239
Group IV	– Dealers with weak financial metrics	970		997
Group V	– Dealers warranting special mention due to elevated risks	396		260
Group VI	– Dealers with loans classified as substandard, doubtful or impaired	77		81
		$	10,319	$	9,957

Transactions with GM Financial The following table shows transactions between our Automotive segments and GM Financial. These amounts are shown in GM Financial's condensed consolidated balance sheets and statements of income. All balance sheet transactions in the table below are eliminated. Income statement amounts may not fully eliminate due to timing.



	June 30, 2018		December 31, 2017
Condensed Consolidated Balance Sheets
Commercial finance receivables, net due from GM consolidated dealers	$	379	$	355
Direct-financing lease receivables from GM subsidiaries	$	120	$	88
Subvention receivable(a)	$	735	$	306
Commercial loan funding payable	$	75	$	90



	Three Months Ended				Six Months Ended
	June 30, 2018		June 30, 2017		June 30, 2018		June 30, 2017
Condensed Consolidated Statements of Income
Interest subvention earned on finance receivables	$	137	$	122	$	267	$	232
Leased vehicle subvention earned	$	813	$	754	$	1,611	$	1,460

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(a)	Cash paid by Automotive segments to GM Financial for subvention was $1.1 billion and $1.2 billion for the three months ended June 30, 2018 and 2017 and $1.7 billion and $2.2 billion for the six months ended June 30, 2018 and 2017.