Ally Commercial Finance, a unit of Ally Financial Inc. that provides senior secured commercial-lending products to primarily U.S.-based, middle-market companies, announced that effective May 1 it will be aligned under Ally Bank, the direct banking subsidiary of Ally Financial.
In a press release the company said the move into Ally Bank “will provide a stable, competitive source of funds to support the continued success and growth of the business.” In conjunction with the move, the business will change its name to Ally Corporate Finance, to more closely reflect its current business objectives and customer base.
“Ally Corporate Finance has been a dependable and creative provider of financial solutions for our middle-market clients and the private equity community for over ten years,” said William Hall Jr., president and CEO of Ally Corporate Finance. “The move into Ally Bank provides us with a stable, highly competitive cost of funds in addition to the obvious benefits of being part of such a highly regarded banking franchise.”
Ally Corporate Finance’s principal products are secured, floating rate revolving lines of credit and term loans that generally have maturities of five to seven years. The business is headquartered in New York and has offices in major cities across the U.S.
General Motors Co. is planning to sell its stake in Ally Financial Inc., the auto lender majority owned by U.S. taxpayers, a person with knowledge of the transaction told Bloomberg.
Selling now would allow GM to avoid a months-long lockup tied to Ally’s initial public offering, according to the person, who asked to remain anonymous because the deal isn’t public. The automaker also may seek to tap demand for Ally’s shares after the lender’s private placement that raised $1.3 billion earlier this year was oversubscribed, the person said. That deal diluted GM’s stake from about 9.9 percent to 8.5 percent, according to data from regulatory filings.
Ally, formerly known as GMAC, was once the in-house financing arm of GM. The pending sale was reported by The Wall Street Journal, which described the deal as a private placement valued at about $900 million.
GM’s stake is held indirectly in an independent trust, according to the automaker’s quarterly securities filing. The stake was required to be sold by Dec. 24 before the Federal Reserve granted a two-year extension in October.
Gina Proia, an Ally spokeswoman, and GM’s Tom Henderson said their companies had no comment on the sale.
Ally Financial Inc. and Wolters Kluwer Financial Services today (Sept. 9) announced that Ally has begun accepting recreation vehicle finance applications through Wolters Kluwer’s AppOne dealer portal. According to a press release, AppOne is a web-based platform that provides Ally and its RV dealer customers the opportunity to simplify both the credit application and contract preparation processes through an additional channel.
Additionally, Ally will offer dealers the ability to print finance contract documentation through the AppOne portal. This feature will be available in 22 states immediately with additional states to follow.
“We know that dealers want competitive rates, quick credit approvals and fast funding, and we plan to be aggressive on all of these fronts as we continually look for ways to increase the value we offer,” said Mark Manzo, Ally vice president, Alliance Sales. “Our presence on the AppOne dealer portal is one more example of how we’re listening to our dealers and focusing on their priorities.”
AppOne automates traditional processes at the dealership, which helps ensure that financing sources receive funding packages that meet their guidelines. The system helps improve the process for both financial sources and dealers by reducing the number of contracts held up for funding.
“We are committed to offering innovative technology and strategies to address the challenges dealers and financing sources face,” said Brad Fleener, senior director and general manager of Indirect Lending at Wolters Kluwer Financial Services. “Our solutions help both dealers and financing sources meet compliance and legal requirements while simplifying the end-to-end process. That means we can help Ally Financial meet the needs of their dealers as Ally builds its portfolio while also helping dealers focus on their retail customers.”
Ally Financial Inc. moved closer to repaying its government bailout as the lender reached agreement with creditors of its bankrupt mortgage unit.
Bloomberg reported that while financial terms of the accord weren’t included in a statement from Ally, the company said it will be insulated from private claims against its Residential Capital LLC mortgage arm, once ranked among of the largest originators of subprime mortgages. The sum will be kept confidential until next week when debtors are expected to formally support the plan in court, Ally said.
ResCap’s bankruptcy has been one of the biggest sticking points as Ally seeks to sell shares to the public and pay back a $17.2 billion bailout received during the global credit crisis. Ally CEO Michael Carpenter has been selling assets to raise money and reiterated this month that an initial stock offering would be the best option.
The accord is “a seminal moment for Ally” that will “put the issues related to the mortgage industry behind us,” Carpenter said in the statement. The company will be free to concentrate on auto finance, where Ally said last year it was ranked No. 1 in combined sales and leasing, and its online bank.
If approved, the agreement may head off the possibility that Ally must pay billions more than it budgeted to settle ResCap’s debts, including those tied to bad mortgage bonds. ResCap filed for bankruptcy last year as defaults soared and investors demanded refunds.
Ally Financial Inc., the auto lender 74 percent-owned by the U.S. government, swung to a third-quarter profit, helped by its strong auto-lending and mortgage businesses.
Reuters reported that the Detroit-based lender said it earned $384 million in the quarter, compared with a loss of $210 million a year earlier. Ally entered the RV lending market in June of 2010.
The company’s mortgage operations, excluding Residential Capital, reported a pre-tax income of $354 million, compared to just $13 million a year ago.
The residential capital mortgage unit filed for Chapter 11 bankruptcy protection on May 14 to insulate the parent company from mortgage liabilities.
U.S. automotive earning assets rose 21% in the quarter and net financing revenue was up 22% in the United States.
Ally, previously known as GMAC Financial, was once the auto lending arm of what is now General Motors Co.
The company received $17 billion in bailouts from the U.S. government during the financial crisis and has been selling assets to repay the money.
Ally Financial announces the addition of Bruce Jackson to the position of national sales director, according to a press release. He will report to Tim Russi, executive vice president, North American Auto Operations.
In this role, Jackson will be responsible for identifying growth opportunities to build the company’s diversified dealer relationships in the U.S. market. His duties also include expanding Ally’s business in the recreational vehicle market. Ed Arienti, Ally’s director, finance for the RV business will report to Jackson.
Prior to joining Ally, Jackson served as senior vice president, dealer financial services at Bank of America, a position held since 1997. He began his career in 1991 with Toyota Motor Credit Corporation in Houston.
“Bruce brings tremendous skills and expertise to the Ally Auto team,” said Tim Russi. “His experience in exceeding growth targets and building strong relationships throughout his career will allow us to continue accelerating our growth plans in our diversified channel.”
Forest River Inc., a leading RV manufacturer based in Elkhart, Ind., has selected Ally Financial as an additional provider for dealer inventory financing in the U.S. The agreement is effective immediately.
“Ally Financial is a proven financial services provider with nationwide scale for the U.S. RV industry, and we are pleased to develop this relationship for our dealer network,” said Joseph Greenlee, CFO for Forest River.
According to a press release, Ally Financial will participate in Forest River’s interest reimbursement program for RV dealers obtaining wholesale financing from Ally. Eligible dealers can receive an interest rebate from Forest River for units sold to retail customers within 90 days of invoice.
“We’re excited about the rebate program because it essentially speeds up the average turn time for inventory,” said Mark Manzo, vice president of Alliance Sales for Ally Financial. “That’s good for us and good for dealers, enhancing their business model.”
In addition to wholesale financing, Ally also offers RV dealers real estate and commercial loans, inventory insurance, remarketing services for RV trade-ins and consumer financing to support new and used RV sales.
“Forest River is a quality manufacturer that expects a world class financing experience with attractive terms,” said Mark Manzo, vice president of Alliance Sales for Ally Financial. “We have the infrastructure and capabilities to meet those needs, and Ally welcomes the opportunity to grow its RV portfolio while serving Forest River dealers and their customers.”
“Since we entered the RV finance business, our goal has been to provide a full gamut of services to the industry. Our focus ranges from smaller dealerships to the large, national retailers. Currently we have over 1,000 RV dealer relationships.”
Forest River, a Berkshire Hathaway company, currently has manufacturing in six states within the United States with more than 8,000 employees producing numerous brand names. The company sells to independent dealers in the United States and Canada.
“At Ally, we are committed to the RV market,” Manzo said. “Looking at the seasonality and flexibility in the wholesale market, we see this as an opportunity for us to grow our market share and help dealers grow sales.
The Vehicle Production Group LLC (VPG) selected Ally Financial as the preferred financing provider for its vehicles in the U.S. According to a press release, Ally Financial will offer wholesale financing, floorplan insurance and remarketing services for VPG dealers, as well as retail financing for their customers.
VPG introduced the MV-1 mobility vehicle in September 2011. It is the first factory-built mobility vehicle that is compliant with American Disabilities Act guidelines, designed and engineered for efficient wheelchair accessibility. The MV-1 is assembled by AM General LLC in Mishawaka, Ind., and is offered in several models, including a factory-direct compressed natural gas (CNG) fueling system.
VPG and Ally have entered into a multi-year agreement for the preferred provider financing relationship.
Mark Manzo, vice president of Alliance Sales at Ally Financial, said: “We are proud to add The Vehicle Production Group to our list of preferred clients. Our underwriting team stands ready to support MV-1 sales. The relationship with VPG will enable us to serve the growing population in need of mobility vehicles.”
According to the U.S. Census Bureau, 3.3 million people in the U.S. age 15 years and older used a wheelchair in 2010.
In the U.S., Ally Financial is currently the preferred financing provider for General Motors, Chrysler, Fiat, Maserati and Saab vehicles and Thor Industries Inc. The company finances both new and used vehicles, as well as offering insurance products and remarketing services for auto and RV dealers.
A year after adding wholesale floorplan financial services to its retail lending portfolio in the RV industry, Ally Financial Inc.’s dedicated sales force — for the second year in a row — exerted a strong presence at the Recreation Vehicle Industry Association’s (RVIA) National RV Trade Show in Louisville, Ky.
A bank holding company formerly known as GMAC Inc., Ally stepped into the RV market – an arena that some lenders had fled as the global economy sputtered – in June of 2010, convinced that the RV industry was underserved and that its clientele of lifestyle-oriented enthusiasts would yield consistent business growth as a niche business for years to come.
Now, the senior management of Ally — the world’s largest auto lender – reports that the Detroit-based firm has made appreciable inroads in the RV arena as it strives to position itself as a full-service company that works to “partner” with dealers and advise them in both good times and bad.
“We are a full spectrum lender — wholesale, retail, cap loans, mortgages,” says Mark Manzo, vice president of Alliance Sales. “A lot of lenders out there will do a good job at wholesale. Some will do a good job at retail. But we feel we have a full commitment to service the dealers in the RV industry on all their product segments, plus insurance as well as remarketing services.”
“We think bringing a whole suite of services is where our value proposition really shines,” Tim Russi, executive vice president for North American Operations, told RVBUSINESS.com. “While we launched in June 2010 on the retail side, last year we added our wholesale lending so we could start doing floorplan loans and other financing needs that dealers might have. As we approach the marketplace, we think that high value is added to the dealer. We want to sell as many products as we have available.”
In line with that full-spectrum approach, Ally is placing a special emphasis this winter on three basic services, the first of which is similar to programs Ally has offered before on the automotive side of the business.
“The first message we are pushing strongly right now is ADR – Ally Dealer Rewards — one of the things we launched this year,” says Manzo. “Nobody in the business has it. We launched it Nov. 1. The more business you do with us, the more we share in the rewards. For instance, once a dealer does a million dollars in retail business, we start to give a dividend back and will pay a dividend every month based on the new business. We also give a bigger reward if dealers wholesale with us.”
Ally’s also promoting an “Express” program, enabling dealers to send in an application from qualified buyers — mainly upper-prime buyers – without having to call in ahead of time for amounts of up to $125,000, and it can be used for product back to 2007. “Basically,” says Manzo, “what they do is check a list, meet the qualifications and send it in. We also give a rate discount off our standard rates for that.”
Another top-of-mind program for Ally is its “SmartAuction” online auction service, a dealer-exclusive wholesale online auction site.
“Nobody else in the industry has a focus on remarketing opportunities or alternative ways to handle used product like our online auction, where dealers can buy and sell used RVs,” explains Manzo. “They can also take a customer’s RV on consignment, put it on the SmartAuction and they don’t have to have it sitting on their lot.
“It’s pretty new to the industry,” he added. “Our biggest challenge is getting inventory on it. We are going to concentrate on helping dealers understand what it’s all about, and we are going to have a special promotion between now and March — no buy fee, no sell fee — so dealers can basically use SmartAuction for free.”
SmartAuction, Russi maintains, has the potential of increasing turns for many dealers. “If you (a dealer) make a mistake, you don’t have to live with it until someone walks onto your lot,” noted Russi. “You can get product to another dealer who may have a better opportunity to sell that individual piece.”
Contributing to the unique nature of SmartAuction, they add, is its dealer-only format and the ability for a retailer to flag – and be alerted about — specific types of units.
“The other thing that makes it unique is arbitration,” says Russi. “Often times with auction sites, especially online, if there’s a problem, dealers have to work it out with the buyer or the seller, depending on their position. We get in the middle and we handle that. Once they buy, they don’t have to negotiate. If there’s a problem, we get in and handle it and try to make it as hassle-free as possible.”
The former finance arm of General Motors said today (March 31) it is preparing an initial public offering as it seeks to repay billions in government aid received during the financial crisis, Associated Press reported.
Ally Financial Inc. said in a filing with the Securities and Exchange Commission that the IPO could raise up to $100 million, but the actual offering will likely be larger. The preliminary estimate of proceeds often changes closer to the IPO date as the offering is pitched to investors.
GM itself is an example of the possible change in amount: When it announced plans to go public to pay money back to the government after being bailed out, it also said it would sell up to $100 million worth of common stock in its initial filing. The IPO in November raised $23.1 billion.
“We’re talking about a number that could vary dramatically,” said Scott Sweet, a longtime analyst of IPOs and founder of IPO Boutique. “GM started at a number that wasn’t even remotely close to where it ended. That’s likely the same situation here.”
Ally will not receive any proceeds from the IPO.
Ally, formerly known as GMAC Inc., makes loans to GM customers and finances wholesale financing and retail financing for all RVs. The government first bailed out Detroit-based Ally in late 2008 as part of the Bush administration’s assistance to the U.S. auto industry. The Obama administration invested additional sums in May and December 2009.
In total, Ally received $17.2 billion in government support. It has already returned $4.9 billion through dividend payments and trust preferred securities sold earlier this month. The Treasury Department now owns 74% of Ally’s stock.
Ally did not say how many shares the government would sell in the IPO or when the offering would happen. Similarly, Treasury officials didn’t provide details about how much of its holdings would be sold initially or when the IPO might be held. The agency said in a statement that it supported Ally’s move to launch the IPO.
In addition to its holdings of common stock, Treasury also owns $5.9 billion in preferred stock, which are convertible into common stock. For the Treasury to break even on the $17.2 billion in support it provided Ally, it will have to sell the preferred stock for the $5.9 billion it is valued at and realize approximately $6.4 billion from the sale of the common stock.
Citi, Goldman Sachs, J.P. Morgan and Morgan Stanley are managing the IPO.
Ally Financial Inc., the U.S.-owned lender preparing for an initial public offering, is bolstering ties to General Motors Co. dealers amid signs the automaker may become a rival in vehicle financing, Bloomberg News reported.
CEO Michael Carpenter held dealer meetings in several cities and broke custom by scheduling a first-ever event at the National Automobile Dealers Association (NADA) in San Francisco this month that didn’t include executives of GM, the biggest U.S. car manufacturer, or Chrysler Group LLC, said Gina Proia, an Ally spokeswoman.
Ally, the biggest U.S. new-car lender, started as a GM unit and still gets most of its business through GM and Chrysler dealers. With an IPO in the works, Detroit-based Ally wants to assure investors those dealers will remain customers for years to come, said Maryann Keller, an auto industry analyst. GM is expanding its own finance operations, marked by last year’s $3.3 billion purchase of AmeriCredit Corp.
“The number one question Ally will have to answer on the roadshow is how they can go public if their number one customer is moving away from them,” said Keller, principal of a self- named consulting firm in Stamford, Conn. “They’re going to have to tell a story about what their business model is going to be.”
At stake for Ally is almost $23 billion in U.S. retail contracts as of last year on 803,000 new vehicles. Carpenter, 63, also faces encroachment from traditional lenders like Capital One Financial Corp., which caters mainly to retail customers, and JPMorgan Chase & Co., which is targeting dealers. That’s home turf for Ally, formerly known as GMAC Inc., the largest source of funds for GM dealers and customers such as Thor Industries Inc.
GM acquired AmeriCredit to help the automaker offer credit to more consumers, Dan Ammann, GM’s vice president of finance, said last year. Renamed General Motors Financial Co., the unit has expanded since the takeover and may increase loans to borrowers with lower credit scores.
GM Financial started a trial leasing program in Ohio late last year and expanded to seven states in the Northeast in January. GM may also challenge Ally’s hold on dealers by lending them cash to purchase inventory, said Duane Paddock, chairman of GM’s National Dealer Council. Ally dominates that business, providing “floor-plan” funds to 82% of GM dealers and 76% of Chrysler dealers, according to the lender.
“We have assumed that GM Financial would become a floor- plan source,” said Paddock, who owns a Chevrolet dealership in Kenmore, New York, and is co-chairman of the national dealer council’s finance committee. “GM said never say never, but certainly not today. It’s not going to happen any time soon.”
The automaker’s management also has debated buying all or part of Ally, a discussion that began before the AmeriCredit purchase, three people with knowledge of the discussions said in May. CFO Chris Liddell said in June that it doesn’t make sense to carry billions of dollars in lending assets on the automaker’s books.
There are no current talks about a sale between GM and the U.S. Treasury Department, which owns 73.8% of Ally after a series of bailouts totaling $17.2 billion, said two people with knowledge of the company’s plans. They declined to be identified because acquisitions are confidential. GM sold 51% of GMAC in 2006 for $7.4 billion to a group of investors led by Cerberus Capital Management. The bailouts have since diluted that stake to 7.8%. GM still controls about 9.9%.
Renee Rashid-Merem, GM’s spokeswoman, declined to comment, while Ally’s Proia said the relationship with GM “is an important and mutually beneficial strategic alliance.” Mark Paustenbach, a Treasury spokesman, said he couldn’t comment.
Other lenders are also making a push to expand their dealer business. JPMorgan has become more aggressive in lending for dealer inventory, said James Wood, who attended a meeting with Ally executives on Feb. 17 in Dallas and owns dealerships in Decatur and Denton, Texas. Capital One CEO Richard Fairbank said in a January earnings call that the McLean, Virginia-based lender has increased auto lending by “deepening dealer relationships.”
Mary Kay Bean, a spokeswoman for New York-based JPMorgan, declined to comment on whether the lender is increasing the financing or products it provides to GM and Chrysler dealers.
GM also offers leasing programs through U.S. Bancorp and in May 2010, Chrysler partnered with Santander Consumer USA, a division of Spain’s biggest bank, to offer loans to less creditworthy borrowers.
Laurie Kight, a spokeswoman for Santander Consumer USA, confirmed the company’s agreement with Chrysler and said the lender didn’t have similar agreements with other manufacturers.
The meeting at NADA, billed as the “automotive industry event of the year,” and the U.S. tour may mark Ally’s response to heightened competition, said Adam Steer, an analyst at New York-based CreditSights Inc. In the past year, Ally has also moved away from an almost total reliance on GM and Chrysler, expanding to serve Saab Automobile AB and Thor Industries Inc.
The shift at the San Francisco convention was having “our own meeting” to give everyone an update on the company as it sharpens its focus on auto lending, Proia said. In past years, Ally would have met with dealers in events hosted by automakers or other companies rather than hold its own, she said.
“The main motivation for doing this is to provide dealers specific information about Ally and what we are doing to support their business and show our commitment,” Proia said.
Ally made more new-car loans than any other lender last year, according to Experian Automotive, a Costa Mesa, Calif.-based firm that tracks auto-lending data. The company controlled about 38.2% of GM consumer loans and 45.4% for Chrysler at the end of 2010, according to a statement.
On the tour to meet dealers, Carpenter made the case that Ally’s status as a bank holding company will mean it can borrow money more cheaply than non-bank finance companies and finance the purchase of dealer inventory at lower rates, said Jim Hardick, co-owner of Moritz Chevrolet in Fort Worth, Texas, who attended the Dallas meeting.
The lender can finance dealer inventory at about 2.25%, said Tom Durant, owner of Classic Chevrolet in Grapevine, Texas. Before Ally became a bank holding company, GMAC loaned his dealership wholesale financing at 3.75%, Durant said.
“They’re trying to get the dealers on their side,” Durant said. “This has more to do with their IPO than it does with dealers.”
Ally Financial Inc. wrote almost half of the loan and lease contracts on new General Motors Co. vehicles sold in the United States in the fourth quarter of 2010, Automotive News reported.
The 49.7% penetration for GM vehicles was up from 34.2% in the third quarter of last year and up from 30.3% year-over-year.
The jump in GM penetration took place as Ally’s global auto finance and insurance business more than doubled its fourth-quarter income year-over-year to $765 million, from $283 million. The company, in a statement today, attributed the growth to lower loan losses, a rise in retail loan volume and a stable wholesale finance business.
The North American auto finance business reported pretax income of $589 million for the quarter, up from $343 million year-over-year.
Ally is the reorganized and renamed banking entity that was GM’s longtime captive lender, GMAC Financial Services. GM and its trust fund still control about 9.9% of Ally’s common stock. The U.S. Treasury Department controls 73.8% of the stock.
No finance incentives
The increase in penetration was significant because it was achieved primarily without the finance incentives Ally offers through an exclusive preferred lender contract with GM. The contract is to expire in 2013.
“Today we are not dependent on it for our success in the marketplace,” CEO Michael Carpenter told analysts in Ally’s fourth-quarter conference call this morning. “It will be a complete nonissue.”
Carpenter, 63, said he knew of no plans for GM-owned GM Financial to compete with Ally for the inventory finance business. The two compete for retail leasing and nonprime lending.
Ally’s penetration of the wholesale finance business remains more than 82% on GM stock and 76% for Chrysler stock.
Its retail penetration for new Chryslers was 36.3% for the quarter, down from 49.4% in the third quarter of last year, but up year-over-year from 25.5%.
Overall retail volume in the United States rose 72% from the year-ago fourth quarter to $9.3 billion from $5.9 billion, including new and used, loans and leases. That includes steady increases in its new-vehicle retail loan volume outside the GM and Chrysler dealer networks — to $300 million from $100 million year-over-year.
The company says the boost is linked to rising auto sales, expansion of its dealer network and dealer rewards program and greater focus on lease and nonprime credit business.
Carpenter also said the bank holding company model has lowered Ally’s cost of funds so it can compete effectively for dealers’ business with banks and even captive finance companies. It is more competitive than when it was GMAC, and its cost of money is about a half-percentage point lower than Ford Motor Credit Co.’s, he said.
The savings will continue as Ally builds its bank deposit base and buys out the U.S. Treasury’s stake in the company, he said.
The bigger picture
For its entire business, Ally said fourth-quarter earnings were $79 million, compared with a loss of $4.95 billion in the same period a year earlier. Annual profit was $1.1 billion versus a $10.3 billion loss in 2009.
Carpenter is preparing the company for an initial public offering that may take place this year. Last week, Ally interviewed investment banks to manage the IPO while the U.S. Treasury Department named Perella Weinberg Partners LP to assist with the disposal of its stake.
Ally reduced risk in its mortgage business, which “significantly strengthened the company and will enable repayment of the U.S. Treasury’s investment over time,” Carpenter said in the statement.
“These results are very important for their IPO,” Mirko Mikelic, a senior money manager at Fifth Third Asset Management in Grand Rapids, Mich., said before the announcement. “It obviously helps with the pricing, and if they continue to post good results there will be strong demand.”
The mortgage business posted a $172 million pretax profit from continuing operations, compared with a loss of $180 million in the last three months of 2009.
Ally said today it hasn’t found “any evidence of inappropriate foreclosures in its review process,” amid concern some lenders have taken improper shortcuts to speed the process of taking homes.
National wholesale and retail lender Ally Financial Inc. made its presence known at the 48th Annual National RV Trade Show, Nov. 30-Dec. 2 in Louisville, Ky., with stand-alone booths and desks within the displays of Thor Industries Inc. with whom Ally established a “preferred lender” relationship earlier this year.
“We wanted to be in Louisville to support the industry. If you are going to be a major participant in it, there are obligations to support the industry event,” stated Tim Russi, Ally’s executive vice president for North American Operations, who was joined at the show by more than 20 associates from the Detroit-based lender.
“With the announcement that we are getting into wholesale financing — and knowing the season that we are about ready to get involved in from an RV perspective — we want to make sure the dealers have us on their minds,” said Russi.
Indeed, Ally has its sights set on becoming a major factor – a national-scale RV industry lender – along with GE Capital and Bank of America. And that’s pretty big news, considering Ally Financial extended $22.3 billion in U.S. auto consumer financing for the first nine months of 2010, making it likely the No. 1 ranked provider of new car financing in the U.S. in 2010.
“We want to be part of the upswing of this industry,” Russi, a former Bank of America executive who oversees Ally’s automotive and RV lending services in the U.S. and Canada, told RVBUSINESS.com. “Some lenders have left the market while others in it are potentially retracting, and there are not many providers in the industry. So, we think the time is right to enter the market.”
In a way, Russi points out, Ally has been in automotive financing as GMAC for a long time. Formerly the captive finance company of 90-year-old General Motors Corp., Ally became an independent financial services company in 2006 and a bank holding company in 2008, launching Ally Bank in May of 2009. Ally’s parent company changed from GMAC Inc. to Ally Financial Inc. in May, followed by the rebranding of its automotive finance business in July.
In 2009, meanwhile, President Obama named Ally Financial as preferred financial provider for Chrysler Group LLC. “We have preferred provider relationships with GM, Chrysler, Saab, Fiat, Suzuki and Thor,” said Russi. “And we’re looking to expand our relationship with other OEMS as well, which is an important concept as we diversify our book of business from what was historically almost 100% GM. As a bank, what you’d like to see is a diversified business.”
Ally Financial offers a variety of auto-financing products, indirect retail financing for new and used vehicles and RVs, auto leasing as well as wholesale financing and remarketing services.
Leading the RV industry lending team are some familiar faces, including the bulk of the former Thor Credit staff. Industry veteran Ed Arienti runs the retail sales force for the RV sector as director of recreational finance sales and teams with Rich Morrin, commercial operators leader, for RV dealer wholesale financing.
Also key is Mark Manzo, who, as vice president of alliance sales, manages OEM relationships, including that between Ally and Thor.
Ally’s RV industry entry started with an April announcement by then-GMAC Financial Services that it would provide RV consumer financing, working with Thor Industries Inc. as a preferred retail lending provider.
Then, on Nov. 23, right before the Louisville Show, Ally announced that it would diversify into wholesale financing, focusing from the outset on Thor’s dealer network.
“We benchmarked current options and needs in the industry and will offer a very competitive wholesale financing product for RV dealers,” Russi stated. “Our program is tailored to the recreation vehicle business with attractive terms and flexible credit lines that will accommodate the seasonal fluctuations in RV inventory. We view our retail and wholesale financing, along with remarketing tools, as a full-service offering for dealers.”
Qualified dealers may obtain wholesale financing from Ally Financial for all or a portion of their inventory, reported Ally, which currently extends retail financing through dealers in about 40 states and plans to expand its RV retail financing nationwide by the end of the year.
“The way we like to create a relationship is a full spectrum relationship credit offering through the dealer,” Russi emphasizes. “Everything centers around the dealer. The more we do with them, the better our value proposition is.”
So, is the Thor relationship exclusive to Thor dealers?
“We are not exclusively Thor,” said Russi, “but because of our relationship with them we obviously are going to focus on their dealer network needs first. That’s our entry point into the industry. Keep in mind that Thor dealers — and I think they number 1,200 — represent about 75% of the RV space. We think by focusing there, we are going to build relationships with the majority of the industry.”
When a Thor dealer has multiple brands and sells non-Thor brands, he noted, Ally will still provide retail or wholesale financing for the products of those other branded companies.
Is Ally in it for the long haul?
“We wouldn’t have entered it to exit it,” added Russi. “We’ve got plenty of auto business. We are not going to run out of capacity. We’d like it (the RV segment) to be substantial. We’d like to systematically grow our book.”
The fact that Ally has a dedicated RV sales staff based in Orange County, Calif., is also a testament to Ally’s commitment, adds Russi. “But we also intend to leverage our entire structure into the space,” adds Russi. “If we don’t have someone conveniently located from an RV sales perspective, we will leverage the existing sales force, which is a national sales force of about 200.”
As automobile financing gets its strength back, Ally Financial Inc. posted its second consecutive quarterly profit. The lender, which is formerly known as GMAC Inc., reported a net income of $565 million in the second quarter, compared with a $3.9 billion loss in the same period a year earlier.
In a statement, Ally said that all of its operating segments were profitable. After receiving over $17 billion in bailouts, Ally is 56%-owned by the U.S. It also doesn’t have publicly traded shares. Kirk Ludtke, senior vice president for CRT Capital Group LLC in Stamford, Conn., said that on the auto finance aspect, the trends have been “very positive,” marioso.net reported.
He added that the auto portfolio “held up nicely through the recession.” CEO Michael Carpenter aims to refashion Ally into a lender that serves more companies than just General Motors Co., its former parent. GM plans to purchase AmeriCredit Inc. to help finance car sales.
Last May, Ally adopted its new name from its banking unit. Since then, it has expanded its client list to include Saab Automobile AB and Thor Industries Inc., the largest maker of recreational vehicles.
Kathleen Shanley, a senior bond analyst at independent debt-research firm Gimme Credit LLC in Chicago, said that Ally’s strategy is to become a more diversified bank. The company also now has a media campaign to build its online bank.
Ally Financial Inc. (Ally) today (July 13) announced that it will rebrand its GMAC consumer and dealer-related auto and RV finance operations in the U.S., Canada and Mexico and begin using the Ally name.
This follows the transition of the corporate entity from GMAC Inc. to Ally Financial Inc. in May. The rebranding of the auto finance operations in these markets will take effect during the month of August.
The Ally brand will be used for auto financing activities in the three North American markets, including activities to support the following manufacturers: General Motors, Chrysler, Saab, Thor Industries Inc. and FIAT Mexico.
“The move to the Ally name allows us to invest in a brand that we own and can build upon for the long term,” said Ally President Bill Muir. “An ally is someone you rely on to support you, and our new brand embodies our 90-year heritage as a trusted finance source for the automotive industry.”
In connection with the rebranding, Ally will be making a series of enhancements to the customer experience beginning with:
- Simplifying and streamlining consumer materials and online services to offer a more straightforward approach to auto financing.
- Investing in enhancements to the customer service process.
- Offering financial tools to simplify the payment calculation process.
- Providing opportunities to co-brand and customize certain consumer materials with information from the manufacturer and the dealer.
“While our name has changed, our primary focus and core business continues to be automotive financial services,” said Muir. “Our dealer customers and auto partners can count on our ongoing commitment to their success.”
As one of the largest automotive finance companies in the world, Ally extended more than $16 billion of credit to retail customers in the first half of 2010 in the U.S., Canada and Mexico, which represents an increase in originations of more than 120% from the first half of 2009. For the first six months of 2010, the company extended an average of approximately $2 billion of credit per month to consumers in the U.S.
Chris Liddell, CFO of General Motors, commented: “As we enter an exciting new chapter in GM’s history, Ally remains an important partner and auto financing provider for GM customers. We look forward to continuing that relationship.”
Richard Palmer, CFO of Chrysler Group LLC, commented: “In taking over the financing of so many Chrysler dealers in such a short time Ally has shown itself to be a strong partner for Chrysler and our dealership network. Ally has proven to be a trusted and reliable source of financing with an in-depth knowledge of the auto industry.”
The company’s U.S.-based auto finance products and services will transition from GMAC to Ally Financial on Aug. 23. The auto finance operations in Mexico and Canada will adopt the name Ally Credit on Aug. 16 and Aug. 23, respectively. There will be no change to current customer accounts or billing cycles. Ally’s auto financing operations outside of North America will continue to operate under the GMAC brand as options for further use of the brand are evaluated.
About Ally Financial Inc.
Ally Financial Inc. (formerly GMAC Inc.) is one of the world’s largest automotive financial services companies. As the official preferred source of financing for General Motors, Chrysler, Saab, Suzuki and Thor Industries Inc. vehicles, Ally offers a full suite of automotive financing products and services in key markets around the world. Ally’s other business units include mortgage operations and commercial finance, and the company’s subsidiary, Ally Bank, offers online retail banking products. With more than $179 billion in assets as of March 31, 2010, Ally operates as a bank holding company. For more information, visit the Ally media site at http://media.ally.com.