Tag Archive | "Ally Financial"

Ally’s 2015 Originations Surpass Target Despite Loss of GM

NEW YORK — Ally Financial’s 2015 originations total remained flat from a year ago, with the former captive originating $41 billion in auto loan in 2015, the firm announced this week. But that’s losing General Motors’ subvented lease business last year.

Ally had originally projected originations in the high $30 billion range for the year, but the 53% increase in non-GM/Chrysler originations helped the former captive surpass its originations target. That segment, which the firm refers to as its growth channel, accounted for $12.7 billion of total originations for the year, up from $8.3 billion in 2014.

“The auto finance business was tested this year,” said CEO Jeffrey Brown. “While we have been transitioning to be able to withstand the decline in legacy subvented business, this was the year where the strength and resiliency were tested and proven.

“We fully replaced all the incentivized volume and delivered quality originations,” he added.

For the fourth quarter, auto and lease originations totaled $9.3 billion, up 3% from the prior year. New-vehicle originations accounted for about $4.8 billion of that total, while leases accounted for $1 billion. Used-vehicle origination accounted for about $3.4 billion of Ally’s fourth-quarter originations.

Additionally, non-GM/Chrysler originations grew by 5% from a year ago, while lease originations fell 16% from the year-ago quarter.

Net income for the year rose 12% from 2014 to $1.3 billion. For the fourth quarter, net income totaled $263 million, a 49% increase from the prior-year period.

“Strong asset growth and a good mix of originations drove higher net financing revenue,” said Christopher Halmy, Ally’s COO.

Ally’s auto franchise posted pre-tax income of $333 million in the fourth quarter, an increase of $42 million over the same quarter last year. Ally officials also commented on the finance source’s growing dealer network.

“Ally’s dealer relationships were up 8% year-over-year to almost 11,000; and we’re not just getting into more dealerships, we’re improving our penetration over time with these dealers,” Halmy said.

Overall, Ally’s active dealer network grew 5% in 2015 and now encompasses over 17,500 dealers. Much of that growth is due to new finance relationships Ally has forged with Mitsubishi, Aston Martin, Mclaren and Beepi, officials said.

Ally Financial’s Ally Premier Protection Plan, the vehicle service contract program the company launched last June, has grown to represent nearly half of the company’s service contract volume in the fourth quarter.

“This product is critical to our diversification efforts in the insurance business and the team is doing a great job of getting it into the marketplace,” Brown said.

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SmartAuction Hits Five Million Sales Milestone

DETROIT — Ally Financial has announced that five million vehicles have been sold on SmartAuction, its online auction platform.

To celebrate the milestone, Ally held a special auction for the five-millionth vehicle, with proceeds promised to the auction winner’s selected charities. Classic Chevrolet of Grapevine, Texas, won the vehicle with a bid of approximately $180,000, which will be divided among ten charities in the Dallas area.

The five-millionth vehicle sale on Ally’s SmartAuction represents fifteen years of evolution for the platform. Since launching in 2000, it has grown into a nationwide network of virtual inventory, bringing together more than 8,000 wholesale buyers and sellers to bid on 22,500 vehicle listings each day. Nearly 1,200 different makes and models of cars, trucks, SUVs, motorcycles and RVs are represented on SmartAuction, and buyers and sellers include auto makers, dealers, banks, fleet/rental and auction companies.

“The key to our success has been utilizing feedback from our dealership community and leveraging our relationships with independent auctions, rental and fleet companies, and other vehicle consignors to create the best experience online,” said Steve Kapusta, vice president of dealership online services and remarketing at Ally. “As buyers and sellers have grown more comfortable with online auctions, we’ve been able to grow the platform, expanding the virtual inventory of vehicles and incorporating new technology and tools that make purchase and sale transactions easier and faster every day.”

SmartAuction holds a daily online auction where users can bid live on thousands of vehicles nationwide, bringing a unique, real-time auction experience to the online channel. On the platform, buyers can create custom search criteria and schedule alerts to help them target specific cars, and then bid on the vehicles that meet their criteria in real time or via a convenient auto bid feature. Sellers can create and manage vehicle listings using SmartAuction’s helpful tools and answer questions from potential buyers during the auctions. Both buyers and sellers are pre-screened and validated to ensure smoother, more professional transactions and inspire trust from the user community.

The SmartAuction app for iPhone and Android was launched in 2013. In just three touches, users can purchase a vehicle and pay for it automatically using their credit line. The SmartAuction app has an average of 22,500 log-ins each month, and usage has doubled between September 2014 and September 2015, officials said.

“Reaching five million sales on SmartAuction is a testament to the performance of the platform over the years, and its ability to generate value for buyers and sellers around the country,” Kapusta said. “Ally is proud to have strong and trusted relationships with dealers and SmartAuction is just one of the many leading products and services that we offer to help them succeed.”

Approximately $180,000 from the 5 millionth auction sale will be presented on behalf of Classic Chevrolet to their selected nonprofit organizations during a celebration event in Grapevine, Texas on November 16. The organizations will include: 6 Stones Mission Network, Christ’s Haven for Children, The Angel Fund of Trinity High School, RISE Adventures, Grapevine Relief and Community Exchange, Food for the Soul, VAST (Valuable After School Time), Christian Community Storehouse of Kelleher, North Texas SNAP and Neuro Fitness.

“Ally’s SmartAuction platform is an important tool for us when buying and selling inventory, so we are pleased to be part of this milestone for SmartAuction,” said Tom Durant, owner of Classic Chevrolet. “We are also incredibly proud that the funds from this auction will help many organizations in our community that make a difference in so many lives — something the team at Classic Chevrolet is honored to support.”

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Ally Financial Named Mitsubishi’s Preferred U.S. Auto Lender

Ally Financial Inc., the former lending arm of General Motors, will become the preferred financing source for Mitsubishi Motors Corp. in the U.S, reported Bloomberg.

Ally will replace Mitsubishi’s captive finance company and provide lease and retail financing and insurance offerings at about 380 Mitsubishi dealerships, the Detroit-based bank said Monday in a statement. Terms weren’t announced.

Ally is seeking to replace business after General Motors Co. said in January it will use its own lending unit for leases on brands including Buick, Cadillac and GMC. Shares of Ally have declined 17 percent since its initial public offering last year.

Sales of new Mitsubishi vehicles in the U.S. rose 20 percent through March to 23,790, or 0.6 percent of the market, according to researcher Autodata Corp. That’s about an eighth of the 172,312 F-Series pickups sold by Ford Motor Co. dealers and less than a quarter of the 100,505 Toyota Motor Corp. Camry sedans delivered.

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GM Financial Triples Share of GM Leases

SAN FRANCISCO AND FORTWORTH, Texas — Ally’s reaction to General Motors internalizing its leasing program came up at the end of GM Financial’s fourth quarter 2014 earnings call. Daniel Berce, the captive’s president and CEO, said the decision shouldn’t have surprised executives with GM’s former captive finance arm.

“That’s about increasing customer loyalty,” Berce said of GM’s decision. “Lease is a very important product from a loyalty standpoint, and having that customer data and relationship in-house and within control of the GM umbrella was extremely important. Taking that profitability in-house was another factor to consider.

“I don’t think bringing it in-house should be a surprise if you look at our ramp of penetration through 2014,” he added, noting that the firm started out the year with about a 15% share in GM leases. It finished 2014 with just less than a 50% share of the OEM’s lease business.

GM Financial doubled its lease origination volume from a year ago to $7 billion. For the December quarter alone, lease origination volume totaled $2.1 billion.

GM’s decision to end its leasing relationship with Ally Financial and U.S. Bank was announced shortly after the end of last quarter, with GM Financial officially becoming the OEM’s exclusive subvented lease provider for Buick-GMC on Feb. 3.

“Cadillac will follow closely after that [in March], then Chevy,” Kyle Birch, executive vice president and COO of North America, to F&I and Showroom at last month’s 2015 National Automobile Dealers Association (NADA) Convention & Expo in San Francisco. “By mid-year, we’ll have full lease exclusivity with all GM brands.”

Birch noted that GM Financial spent a lot of time and investment last year bringing its systems online in anticipation of the November 2014 rollout of its prime APR product. The company also rolled out last May a floorplan financing product; Berce noting during the company’s investor call that he has “pretty modest aspirations” for the product in terms of market share.

“We don’t have any plans at this point to supplant other providers,” he said.

But developing score cards and adding auto decisioning systems for its prime business weren’t the only infrastructure investments the company made last year. Under the direction of Will Stacy, senior vice president of digital and technology services, GM Financial is also working on systems that will drive a better connection between customers, GM and the OEM’s dealers.

“We’re trying to build integration tools with GM so you can apply for credit in an easier way through their sites and through their dealer’s sites,” Stacy told F&I and Showroom at the NADA’s annual convention. “So the idea would be, we’d offer an application or widget that goes on dealership sites so you can apply for a GM Financial loan through one of those 4,200 websites that GM and Cobalt host for their dealers, as well as a beefed up the customer experience for current and future customers with native applications on iPhones, Androids and customer portals.”

The goal, Birch added, is to create touchpoints that will allow customers to interact with the captive finance company however they want, whether through its chat features on the captive’s website, self-service portals or mobile connectivity. “We want to make sure when we have a customer on the books that we’re touching them at the right time to drive them back to the dealers,” Birch explained.

The investments made in the company’s infrastructure were partly responsible for the decrease in pre-tax earnings in the December quarter, which fell from $225 million in the year-ago quarter to $120 million, Birch noted. The company’s acquisition of Ally Financial’s international operations was another factor.

Full-year earnings for the captive were $537 million, down from $556 million in 2013. For the December quarter, the company posted earnings of $59 million, down from $121 million in the year-ago quarter.

Full-year consumer loan and lease originations totaled $21.4 billion, $6 billion for the December quarter alone. Prime originations for GM vehicles totaled $493 million for the year. Outstanding balances of consumer finance receivables totaled $25.7 billion for the year.

The company also added 81 dealers to its commercial lending business, bringing the captive’s total dealer count to 487.

Birch also noted stable credit metrics, with consumer finance receivables 31 to 60 days delinquent accounting for 4.2% of the captive’s portfolio as of Dec. 31, 2014. Accounts more than 60 days delinquent were 1.7%.

Annualized net losses were 2.2% of average consumer finance receivables for the December quarter, up from $2.1% one year ago. For the year, consumer net losses were 1.9%.

GM Financial also reported having total available liquidity of $9.3 billion as of Dec. 31, 2014. That total consisted of $3 billion of unrestricted cash, $4.8 billion of borrowing capacity on unpledged eligible assets, and $0.5 billion of borrowing capacity on unsecured lines of credit and $1 billion of borrowing capacity on a junior subordinate revolving credit facility from GM.

“2014 was a good year for our company,” Birch said at the NADA convention. “Every quarter we had improvement in volume and credit losses. The biggest thing for us in 2014 is we spent a lot of time and investment on bringing all of our systems together, understanding that we were going to get in the prime business from an APR perspective.”

Asked if the company would venture into F&I products for GM, Birch said, “We’re not doing that right now. The products out there right now are GM-based and -backed. We helped in some of the rollout of those products. Now that’s being handled internally by GM. We would expect at some point in our future, and I can’t tell you when, but there’s a natural evolution for those types of products to come back to the finance company.”

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Ally Financial Names New CEO

NEW YORK — Ally Financial Inc. announced today that Jeffrey Brown was named CEO. The former president and CEO of Ally’s dealer-financial services business succeeds Michael A. Carpenter, who is retiring from his post and from the company’s board after five years.

Brown also joins the finance source’s board of directors. He will work closely with Chairman Franklin “Fritz” Hobbs on all areas of the business, officials said.

“Jeff Brown is an extraordinarily talented executive with deep financial and operational experience and a strong vision of how to take Ally forward into the future,” said Hobbs. “The breadth of experience Jeff has gained during these transformation years at Ally has prepared him fully to take on leadership of the company as it enters its next chapter.

Brown joined the company in 2009 as corporate treasurer. In 2011, he became executive vice president of financing and corporate planning, where he oversaw the company’s finance, treasury and corporate strategy activities. In March 2014, he was named CEO of Ally’s dealer-financial services business.

“I am honored to be Ally’s new CEO,” Brown said. “We are absolutely committed to continue serving our millions of retail customers and nearly 17,000 auto dealers with market-driven, innovative products and services supported by 7,000 dedicated Ally employees. We are well positioned to meet the challenges of the evolving OEM market, meet our origination goals, serve our customers better than ever and improve returns for shareholders.”

Carpenter also joined the company in 2009, becoming CEO during a pivotal time. He guided the firm through the 2009 financial crisis and led its transformation from captive finance company to an independent auto finance provider and then publicly traded company last year. In late December, the U.S. Treasury Department sold off its last remaining shares in Ally, marking the end of the government’s final investments in the Troubled Asset Relief Fund (TARP). Hobbs noted that U.S taxpayers made $2.4 billion on their investment in the financial services company.

“Mike stepped in when we needed him most,” Hobbs said. “Ally is a stronger and more focused financial services company today because of him, and it has a great future thanks to his tireless leadership over the past five years. On behalf of the entire board, I thank him for his many contributions and wish him well for the future.”

Carpenter will continue serving as a consultant to the board. And according to officials, Carpenter had been working with the board for several months on succession planning.

“Ally is a tremendous success story on many levels, and I am proud to have been part of it, working alongside so many tremendously talented people as we built what is today the country’s leading auto finance provider, powered by a growing direct bank,” Carpenter said. “Having completed our IPO last April and exited the TARP in December with a strong balance sheet and a market leading position, it is the right time for me to step aside to hand the baton to the next general of leadership. I am pleased that Jeff Brown, who was my recommended successor, has been chose as Ally’s next CEO. I have great confidence in Ally’s future and believe it will continue to grow from strength to strength.”

Steven Feinberg, CEO of Cerberus Capital Management, one of Ally’s largest shareholders, added: “I am extremely enthusiastic about Jeff Brown’s assuming leadership of the company. He brings energy, experience and strategic rigor to the job. Having observed Fritz Hobbs’ leadership of Ally’ board for the past five years, I am particularly pleased that Fritz and Jeff will be working closely together guiding this company for many years to come.”

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Ally ‘Highly Confident’ About Overcoming Boot From GM Leasing Program

DETROIT — Just days before it named Jeffrey Brown as its new CEO, Ally Financial’s then-CEO Michael Carpenter expressed surprise at a move by General Motors to put 100% of its U.S. Buick, Cadillac and GMC lease incentives in the hands of its captive, GM Financial.

“While we were not surprised by the idea of GM growing their captive, we were surprised that they would exclude any competition in the lease space, where Ally has done such a great job for them over the last several years,” Carpenter said during a quarterly earnings call last week. “And frankly, we don’t see how auto sales are increased by having less, otherwise known as no, options for consumers and dealers.”

In early January, General Motors announced that it planned to use GM Financial as the exclusive provider of subsidized leases in the United States, edging out both Ally and U.S. Bank from its lucrative subsidized leasing business.

“This will absolutely not impact our strong relationships and commitment to GM dealers and we will continue to support the channel,” Carpenter added.

The former CEO went on to say that once the company frees up capital from the subvented GM leasing business, it can “redeploy profitably in these other areas and increase share.” Those other areas, according to Carpenter, include the used-car market, franchised dealers and OEMs.

“For example, even though we’re doing well and we have 4% share of the 10,000 non-GM/Chrysler relationships we have, over 6,500 of those do a very modest level of business with us today,” he noted. “And we believe we can increase that penetration with those dealers over the near term.

“We will also continue to have conversations with other auto makers to see how Ally can drive more value in their channels. And these OEMs are a lot more interested in talking to Ally now that we’re out of the TARP, than they were before.”

During the call, officials reported a fourth quarter net income of $177 million, compared to $104 million in the fourth quarter 2013. For all of 2014, the finance source saw a net income of $1.2 billion, up from $361 million in 2013.

The increases were driven in part by results from Ally’s dealer-financial services business, which was headed up by Ally Financial’s new CEO, Jeffrey Brown. The group increased pre-tax income by 45% compared to the prior-year period, but that increase was due, in part, to a $98 million fine levied against Ally in the fourth quarter of 2013 by the Consumer Financial Protection Bureau and U.S. Department of Justice.

“Obviously, the year-over-year delta is impacted by the $98 million CFPB charge we took last year,” noted CFO Christopher Halmy during the call.

Ally’s auto finance franchise business remained strong during the quarter, with earning assets for the business up 3% year-over-year. Consumer auto financing originations for the quarter increased, and originations for the year hit $41 billion, the highest full-year total since 2007.

“The originations in the quarter were $9 billion, which we feel good about given the seasonal nature of the business,” Carpenter said. “These origination levels were driven by strong performance across multiple channels and were higher in every product year over year with the exception of subvented loans.”

New and used originations from non-GM/Chrysler dealers improved 37% compared to the prior-year period and increased 45% for the full year. The non-GM/Chrysler business now accounts for 22% of total consumer originations. Excluding originations from recreational vehicles, non-GM/Chrysler originations increased approximately 50% in the past year.

The finance source’s successes during the quarter and in 2014 as a whole had Carpenter “highly confident” that Ally will overcome being dropped from GM’s leasing program.

“… We have a range of options to handle these shifts in our business, which occur with some regularity,” he said. “And while the specifics may be a surprise of direction, we’ve dealt with this over five years. We have a battle-tested team. We’ve shown what we can do. We view this as another opportunity to evolve that business and we remain optimistic about the future potential, and we are committed to the plan that we showed investors at the time of the IPO.”

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