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.”
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.
President Obama said today (April 30) that the Small Business Administration (SBA) on Friday will announce “expanding eligibility” for loans to automotive suppliers and dealers, including “RV dealers.”
In a noontime speech while commenting on Chrysler Corp.’s impending bankruptcy, Obama said the federal government will provide independent finance company GMAC with the capital to supply retail and floorplan loans to Chrysler dealers and others.
“We will be providing additional capital to GMAC to help unlock our frozen credit markets and free up lending so that consumers can get auto loans and dealers can finance their inventories; a measure that will help stabilize not only the auto market, but the broader economy, as well,” the president said. “And tomorrow, the Small Business Administration will be announcing it is expanding eligibility for some loans to include more supplier and dealers, including RV dealers.”
The Associated Press reported that the president struck a populist tone during the speech while criticizing “a group of investment firms and hedge funds (who) decided to hold out for the prospect of an unjustified taxpayer-funded bailout” for Chrysler Corp.
“They were hoping that everybody else would make sacrifices, and they would have to make none,” he said. “Some demanded twice what they were getting. I don’t stand with them.
“I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers and the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else is making sacrifices.”
Chrysler LLC filed for bankruptcy protection today (April 30) and will form an alliance with the Italian carmaker Fiat Group SpA in an effort to revive the nation’s ailing third-largest automaker, according to The Associated Press.
The Obama administration said it had long hoped to stave off bankruptcy, but it became clear that a holdout group of creditors wouldn’t budge on proposals to reduce Chrysler’s $6.9 billion in secured debt. Clearing those debts was a needed step for Chrysler to restructure by a government-imposed Thursday deadline.
“No one should be confused about what a bankruptcy process means,” President Barack Obama said in a midday announcement. “This is not a sign of weakness but rather one more step on a clearly chartered path to Chrysler’s revival.”
Chrysler filed for Chapter 11 bankruptcy protection in New York with the hopes of emerging in as little as 60 days under the new partnership with Fiat. The government, which has already poured $4 billion in loans into Chrysler, would provide up to $8 billion more to carry the company through bankruptcy, said senior administration officials speaking on condition of anonymity. The government will also help appoint a new board of directors.
The deals give Chrysler “a new lease on life,” Obama said.
“This is not a sign of weakness,” he said. “I have every confidence that Chrysler will emerge from this process stronger and more competitive.”
Under bankruptcy, Chrysler would still sell cars and the government would back its auto warranties. But Chrysler said Thursday that it will idle its plants during the legal proceedings. The company’s chief executive, Robert Nardelli, said he will leave when the bankruptcy is complete.
When that occurs, the Auburn Hills, Mich.-based automaker would end up owned by the United Auto Workers union, the U.S. government and Fiat. The Canadian and Ontario governments, which are also contributing financing, would have small stakes.
But Fiat, which the Obama administration hopes can jump start Chrysler with its fuel-efficient and lower-emission technology, could end up the majority stakeholder. Fiat would initially get 20%, a share that could rise to 35% if certain benchmarks are met. Fiat said Thursday it could get an additional 16% by 2016 if Chrysler’s U.S. government loans are fully repaid.
Obama said Chrysler Financial, the arm of the company that makes loans to buyers and to dealers to finance their inventories, will be merged into GMAC Financial Services, once General Motors Corp.’s finance arm. The new GMAC will get government support. Chrysler’s base of dealers would also be pared down.
The Treasury Department’s auto task force has been racing in the past week to clear the major hurdles that prevented Chrysler from coming up with a viable plan to survive the economic crisis ravaging nation’s automakers.
Along with the Fiat deal, the UAW ratified a cost-cutting pact Wednesday night.
Treasury reached a deal earlier this week with four banks that hold the majority of Chrysler’s debt in return for $2 billion in cash.
But the administration said about 40 hedge funds that hold roughly 30% of that debt also needed to sign on for the deal to go through. Those creditors said the proposal was unfair and they were holding out for a better deal.
“I don’t stand with them,” Obama said.
A person briefed on Wednesday night’s events said the Treasury Department and the four banks tried to persuade the hedge funds to take a sweetened deal of $2.25 billion in cash. But in the end, this person said most thought they could recover more if Chrysler went into bankruptcy and some of its assets were sold to satisfy creditors. This person asked not to be identified because details of the negotiations have not been made public.
On Thursday, a group of funds identifying themselves as 20 of Chrysler’s “non-TARP lenders” released a statement saying they had been sidelined during negotiations between lenders and the government. The group, which said it holds $1 billion in Chrysler debt, complained that the four banks were “obviously conflicted” because they had accepted money from the government’s Troubled Asset Relief Program while they had not gotten TARP money.
The group said its offer to the Treasury Department to reduce its claim to 40% was “flatly rejected or ignored.”
Fiat is getting its stake in Chrysler for giving the company access to its fuel-efficient technology, a move toward cleaner cars that the Obama administration thinks is critical to Chrysler’s future survival. The company has committed to building Fiat cars in Chrysler factories, to be sold as Chryslers.
Obama’s auto task force in March rejected Chrysler’s restructuring plan and gave it 30 days to make another effort, including a tie-up with Fiat.
Chrysler’s bankruptcy filing said it owes more than $10 million apiece to 20 of its unsecured creditors, many of whom are vendors and suppliers.
At the top of that list were: Ohio Module Manufacturing Co. ($70.3 million), BBDO Detroit Inc. ($58.1 million), Johnson Controls Inc. ($50.3 million), Continental Automotive ($47 million), Cummins Engine Co. ($43.9 million) and Germany-based Germersheim Spare Parts ($36.2 million).