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

Photo of several cars on lifts in a service center
Industryby Hannah MitchellApril 9, 2026

Franchised Dealers Stand to Gain Service Business

Cox Automotive research shows both the opportunities and the challenges in turning consumers’ growing affordability needs into increased fixed-operations revenue.

Read More →
Photo of office desk with open laptop on it and an empty chair next to it
IndustryApril 9, 2026

What Matters Most in Building Your Agency

The partner you choose for growth and expansion is key, because better is the ultimate goal instead of growth for growth’s sake.

Read More →
car with hood open, an arm holding a wrench, The most loyal generation text, Agent Entrepreneur logo
Industryby Lauren LawrenceApril 9, 2026

Service Drives Gen Z Loyalty

The dealership profit center plays an important role in customer retention, and generation Z customers are showing the highest loyalty rates, based on recent CDK Global data.

Read More →
Ad Loading...
Photo of man with most of his face hidden as he types on a computer keyboard
Industryby Hannah MitchellApril 2, 2026

Fake Auto Dealer Websites Frauding Consumers

The Point Predictive study traced a pattern across more than 100 websites it believes are being developed by an international theft ring.

Read More →
photo of Volkswagen vehicle steering wheel and interior
Industryby Hannah MitchellApril 1, 2026

One of Earliest U.S. Auto Dealers Exits

The sale of two Minnesota franchises ends a rare multigenerational business while adding to one of the Midwest’s biggest auto groups.

Read More →
chart showing the quarterly electric vehicle market share from 2020-2025
Industryby Lauren LawrenceMarch 27, 2026

EV Sales Slide While Hybrids Climb

California, as usual, led the country in EV registrations in the fourth quarter, but the U.S. as a whole saw a 43% year-over-year volume decrease.

Read More →
Ad Loading...
Photo of new car's tail light
Industryby Hannah MitchellMarch 26, 2026

New-Vehicle Sales Ride Tax Returns Wave

Forecasts show that the spring sales season is rising above overriding economic concerns, among them continuously rising car prices, trade tariffs, elevated interest rates, and now a war.

Read More →
Photo of Toyota car parked in front of a Toyota dealership
Industryby Hannah MitchellMarch 23, 2026

2025 Dealership Buy-Sells a Record

The Kerrigan Index shows that despite a chaotic year of musical trade tariffs, high vehicle prices and more roadblocks, acquirers still flush with pandemic-era cash accelerated the consolidation pace.

Read More →
Infographic from ABB titled “The Intelligent Factory is Accelerating as Automation Investment Increases.” It shows a robotic manufacturing assembly line on the left and key statistics on the right. Highlights include: 33% of manufacturers prioritize cost control, 31% are increasing investment in automation and robotics, 30% cite labor shortages and rising wages as challenges, and 34% identify energy and material costs as a leading concern. Additional sections explain competitive pressures and how automation technologies like robots improve efficiency, consistency, and productivity in modern manufacturing.
Industryby Lauren LawrenceMarch 19, 2026

Automation Acceleration Seen in Manufacturing

Labor shortages, material costs and tariffs are just a few of the reasons automakers are looking to expand their investments in automation and robotics this year.

Read More →
Ad Loading...
Overhead view of container cargo ship loaded with vehicles
Industryby Hannah MitchellMarch 19, 2026

War Threatens Major U.S. Auto Exports Stream

The Middle East imports a sizable share of vehicles made in the states. It’s unclear how the Iran War could affect the keystone market for U.S. automakers.

Read More →