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.
Bank of America’s decision last week to discontinue its indirect retail lending through marine dealers sent a ripple of concern throughout the marine business. However, Bank of America, a heavy-hitter in the RV business, will continue to offer direct consumer financing on marine products through its online e-lending channel at bankofamerica.com, according to Soundings Trade Only.
“We remain committed to the industry and continue to offer wholesale, or floorplan, financing to marine dealers,” Bank of America spokesman Jefferson George said in an e-mail to Soundings Trade Only. “In addition, the above change does not affect our origination process for auto and RV dealers.”
But despite the bank’s assurance of its commitment to the marine industry, some dealers say they will be hurt by the move.
“It’s devastating. It continues to shrink the available markets for consumer lending,” said Larry Russo Sr., of Russo Marine. “As the largest boat dealer in New England, we’re down to two sources. A couple of years ago, we had a dozen retail sources for our customers; we’re down to two. Ouch. And Bank of America was getting half of our business.”
Though the dealership may continue to process loans through a third-party broker, Russo said Bank of America’s decision just adds another layer to the loan process for consumers and makes it more complicated.
“That really hurts because we’re the one on the street, face-to-face with the customer, and a lot of boat dealers have enough volume to earn a dealer-direct relationship and not have to push the customer through a third-party broker,” Russo said. “It just layers the process. It makes it more difficult for us and it certainly reduces our profitability because now we have to share it with a broker.”
Phil Keeter, president of the Marine Retailers Association of America, said it’s just another obstacle dealers have to face at a time when they don’t need any more challenges to doing business.
“It seems like whenever we open one door a little bit, another one slams behind us,” he said.
Bank of America, Keeter said, is a large funding source for consumer loans, possibly accounting for 20% to 25% of the nationwide total.
But not all dealers are adversely affected by the changes.
Darren Plymale, from Galati Yacht Sales, says his dealership lends for Bank of America on a direct and indirect basis, so it’s one of a handful that won’t be hurt by the changes.
“We’re one of the few dealerships that have that ability. I’m probably one of maybe five dealers in the country that will not be affected,” he said. “Anytime you have an indirect lender that is exiting the industry it’s always a concern, but I understand their reasons. They’re trying to curb their losses.”
Newcoast Financial Services, a leading finance firm specializing in the recreational vehicle industry, announced Friday (Aug. 28) the launch of a new website: www.Newcoast.com. The website has been designed from the framework out to educate RV customers on how Newcoast Financial can provide specialized financing programs to meet their unique needs, according to a news release.
Headquartered in Clearwater, Fla.,, Newcoast Financial Services has been offering retail financial services in the boat, yacht, recreational vehicle and aircraft industries since 2001. Newcoast Financial currently has 12 financial representatives serving all 50 states. Other services include extended warranty protection plans for RVs.
“Whether they are purchasing a travel trailer or Class A motorhome or refinancing their current loan, we make sure our customers are offered the most competitive rates plus all the options they deserve in their financial packages,” said James Kelaita, president of Newcoast Financial Services. “What separates us from the competition, besides our low rates and personalized service, is the industry knowledge and experience that we provide. Our team specializes in RV and motorhome loans.”
Newcoast Financial’s RV industry experience means that customers can expect a simple application process, quick approvals and no-hassle closings, he said. In addition, competitive rates and long-term financing (up to 20 years) mean that owning an RV has never been more affordable. Visitors to the firm’s new website will be able to learn about available services, find a local contact, ask questions, submit a loan application and more.
Services include new RV loans, used RV financing and refinancing of existing loans. Newcoast Financial will also help customers choose an extended warranty plan to protect their investment.
“We look forward to helping put people in the recreational vehicle of their dreams, so that they can enjoy the lifestyle they deserve,² said Kelaita. “Our philosophy is well represented by this new website, and we encourage anyone who would like more information on Newcoast Financial and its services to visit us online and contact us with queries.”