Ally Financial Inc has taken numerous measures to ensure it can replace the remainder of its exclusive leasing deals with the largest US automaker, General Motors, forecasting that the former would eventually take the entirety of the business in-house, commented the auto lender’s chief executive.
General Motors, the largest US automaker and the third biggest in the world recently announced that its in-house financing division – GM Financial- would take over from Ally Financial as the exclusive lender for the Buick, GMC and Cadillac brands. Ally now forecasts that the automaker would finish the replacement strategy and take in-house leasing for the larger Chevrolet brand as well in the near future, said Ally Chief Executive Jeffrey Brown in an interview with Reuters. “That is a planning assumption we’ve got today,” commented the CEO.
GM’s decision to finish the contract with Ally has impact on around one-quarter of the bank’s retail lending business, but the company does forecast that the changes would not impact severely the financial books in 2015. The executive pointed out that Ally was now directing its capital towards types of business, such as lending offers for used cars and to dealers that are not associated with GM or FCA US (formerly the Chrysler Group). Ally’s used car lending quota in 2018 surged 18 percent from 2013, while the loans to the aforementioned type of dealers jumped 45 percent. Still, around 23 percent of its $41 billion loan and lease business in 2014 was attributable to GM’s leases it was now pulling back from.