Ally Financial Inc has taken a hit these days as the No. 1 US automaker – General Motors – has decided to stop using the financial services provider for its discounted leases and lending programs.
According to the financial services company, Ally will overcome the situation of losing its primary client by seeking to expand its business towards dealerships that work with other carmakers. Recently, the largest automaker in America told its Buick and GMC dealers that it mulls the replacement of Ally with its in-house financing division – GM Financial, for all of its subsidized leases on models sold since the beginning of February. According to an Ally spokesperson, the move was not a surprise for the lender as GM Financial’s expansion in leasing was simply in line with the parent company’s objective of continued growth – and Ally took the appropriate steps to broaden its business, even as it supported the GM sales network.
For much of the past two years, Ally Financial had to give up previously exclusive deals to subsidize the loans on new GM and Chrysler vehicles and appropriately changed its strategy by increasing the market share with rival carmakers. During the third quarter of last year the service provider lifted its non-GM and non-Chrysler vehicle lending quota by 54 percent from the same period in 2013. Analysts still consider the announcement as a negative development for the company, simply because eases for new General Motors cars totaled almost one-quarter of Ally’s automotive finance business in the third quarter of 2014.