agent Entrepreneur logo
MenuMENU
SearchSEARCH

Ally to Build its Used-Vehicle Finance Business after Strong Q3 Profits

November 3, 2010
4 min to read


DETROIT - Ally Financial Inc., the former GMAC Financial Services auto and home mortgage lender, has been a small player in used-vehicle financing but intends to target that business for growth, CEO Michael Carpenter said.


Ally, which became a bank holding company in December 2008, boasted that it was the top new-vehicle retail lender in the first nine months of 2010, based on Experian AutoCount data, Automotive News reported.

Ad Loading...


But the lender holds just a 1.5 percent share of the fragmented used-vehicle retail finance business through September, behind Wells Fargo Dealer Services at 3.6 percent, Chase Auto Finance at 2.3 percent, Toyota Financial Services at 2.0 percent and Capital One Auto Finance at 1.6 percent, the Experian data show.


The used-vehicle finance market is about twice that of the new-vehicle market, making it a “great opportunity for business,” Carpenter said during Ally’s third-quarter conference call this morning.


Ally also intends to build its vehicle leasing business and to finance more vehicles for people with fair and poor credit. During the credit crisis, the lender shrank those businesses to clean up its balance sheet, but “the pendulum swung a little too far,” said James Mackey, interim CFO.


The company increased its nonprime and lease volume this year, but the business is much smaller than it was in 2006 when it was GMAC.


“We need to increase that volume to be a full-spectrum lender,” said Mackey, but at lower levels than a few years ago.

Ad Loading...


Globally, retail auto finance lending increased 48 percent during the third quarter to $11.4 billion, compared with $7.7 billion in the third quarter of last year. The total includes $9.0 billion in new-vehicle loans and $1.3 billion in used-vehicle loans.


Ally’s new-vehicle lease volume was $1.1 billion, up from just $100 million in the third quarter of last year.


In the United States, total retail originations were $8.3 billion, up from $5.6 billion in the third quarter of 2009 and $8.0 billion in the second quarter of 2010.


At the same time, Ally’s subvented business -- financing enhanced with factory incentives -- is down. “We are competing fair and square in the marketplace,” Carpenter told analysts.


General Motors-subsidized financing was 76 percent of Ally’s retail loan and lease volume in 2006; currently, it’s just 20 percent of Ally’s business.

Ad Loading...


The trend was reversed in the past year. In the third quarter of 2010, GM subsidized $1.7 billion in new-vehicle loans and leases, while Ally wrote $2.0 billion in standard loans and leases. That’s down significantly from the third quarter of 2009, when GM subsidized $3.0 billion in loans and leases, and Ally wrote $1.2 billion in standard loans and leases.


Ally’s wholesale penetration in the United States has dipped for both GM and Chrysler dealers from the second quarter of this year. For GM dealers, penetration is also down year over year.


The company financed 83.7 percent of new GM vehicles in inventory in the third quarter, down from 86.6 percent in the second quarter of this year and 85.9 percent in the third quarter of last year. Ally financed 76.2 percent of the new Chrysler Group vehicles in stock, down from 77.1 percent in the second quarter of this year and up from 31.7 percent in the third quarter of 2009.


But Ally contends its commercial business remains strong. “It encompasses floorplan financing, working-capital loans, store upgrades,” Carpenter said. “We’re an embedded, committed competitor in this industry and have been for 90 years.”


Ally reported net income of $269 million in the third quarter of 2010, up from a net loss of $767 million in the third quarter of 2009.

Ad Loading...


The company has seen three straight profitable quarters overall and seven profitable quarters in a row for its core automotive finance business.


Ally’s North American third-quarter auto finance profit was $568 million, almost double its profit year over year. It reported a $74 million profit in international auto finance, also up substantially year over year. Income for Ally’s insurance business, which serves car dealerships, totaled $114 million, up about 5 percent year over year.


Carpenter cited consistent market share, a more diversified product mix and the addition of Fiat as an auto partner in the United States. Carpenter said he is “optimistic about the long-term prospects for the company.”

More Industry

Blue and white RV parked on beach facing the ocean.
Industryby Lauren LawrenceSeptember 3, 2026

RV Group Expands Carolina Footprint

Blue Compass RV Columbia Northeast is the 13th RV dealership owned by Blue Compass in the Carolinas.

Read More →
Photo of two men and one woman on a discussion panel
Industryby Hannah MitchellSeptember 1, 2026

Agent Acumen

An Agent Summit panel of people who’ve been supporting auto dealers for years gave both timely and timeless advice for those starting out or mulling the prospect.

Read More →
Gloved hand holding two wrenches next to “Turn Overdue into Opportunity” Graphic
Industryby Lauren LawrenceAugust 27, 2026

Missed Maintenance Creates Opportunity

As families get back on the road and into daily school routines, service drives have an opportunity to capture customers who are behind on recommended vehicle maintenance.

Read More →
Ad Loading...
Mitsubishi shadow line-up
Industryby Hannah MitchellAugust 25, 2026

Mitsubishi Unveils U.S. Plan

The automaker announced a strategy that includes an expanded lineup and dealership presence, along with more ‘rugged’ and electric models.

Read More →
Photo of a laptop, cellphone and eyeglasses on a desk next to an office window
IndustryAugust 24, 2026

Selling to Grow

The question of whether you should sell your agency and if so, when, is up to you. But it’s a question worth asking to ensure you keep the business on the right path for yourself, employees and clients.

Read More →
Mechanic holding a vehicle diagnostic device while standing above an open car hood
Industryby Hannah MitchellAugust 24, 2026

Recalled Vehicles Hit 5-Year High

Though the number of events has fallen so far this year, impacted units are up significantly. Meanwhile, regulators consider consumer notification changes.

Read More →
Ad Loading...
outside of car dealership with cars parked in front
Industryby Lauren LawrenceAugust 20, 2026

Auto Group Acquires Top-Performing Rooftop

Car Pros sold its Kia Huntington Beach location to Sutherlin Automotive Group, marking the buyer’s third location in Southern California.

Read More →
Cars from the rear on a Shanghai freeway
Industryby Hannah MitchellAugust 19, 2026

China as Pacesetter

Automotive leaders huddled on where North America stands in the global picture and how it can strengthen its position against the Asian juggernaut’s surging industry.

Read More →
Orange BMW car on empty road.
Industryby Hannah MitchellAugust 14, 2026

BMW Concept Car Makes Fuel to Burn

The prototype developed in concert with a South Carolina university engineering team generates more solar energy than it uses in a typical daily commute.

Read More →
Ad Loading...
Six men standing for photo outside of car dealership
Industryby Lauren LawrenceAugust 13, 2026

South Carolina Auto Group Downsizes

Florida-based group Holler-Classic has acquired four rooftops, its first in South Carolina, from Dick Smith Automotive Group.

Read More →
Ad Loading...