This one chart explains the best part of GM's business right now

General Motors reported disappointing first-quarter earnings on Thursday: $US0.86 EPS versus an expected $US0.97.

According to Sterne Agee auto analyst Michael Ward, the miss can be “accounted for by start-up and launch costs in China and a higher than expected tax accrual.”

Otherwise, he thinks GM’s overall business is headed in the right direction.

GM CFO Chuck Stevens also noted on a conference call Thursday that costs associated with winding down operations in Russia will negatively affect GM’s financials until early 2016.

But there’s one aspect of GM’s business that’s looking good: financing. I say this all the time, but it bears repeating: Automakers don’t sell cars — they sell car loans. In order to make as much money as possible by lending money to customers to buy cars, it’s best if an automaker has a captive finance arm — it’s own bank.

GM has that with GM Financial.

The company included this chart with its earnings-call presentation. I’ve highlighted three things: the North American retail sales percentage for GMF; the financing the GMF is doing for GM vehicles; and the losses that GMF is absorbing on the credit side.

The bottom line is that the GMF business is really growing. Some of this is probably due to increased subprime lending — making loans to customers with less-than-great credit scores. But in a North American market that’s made up of 17 million in annual vehicle sales, a decent percentage of GMF’s loans are going to buyers with good credit.

You want to be growing your financing in North American because it’s currently the world’s best market for new-car sales. Yes, China is growing rapidly. But the process of getting a loan to buy a car is well-established in the U.S. (as is the leasing process, which is also credit-driven).

GM has some issues with its global operations. But at home, the surge in its financing arm’s performance shows that GM’s credit business is very good in its most important market.

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