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Ally Financial and GM Financial are both entering new phases in their evolution, and the moves they’re making were on display at NADA 2015.

March 2015, F&I and Showroom - Feature

by Gregory Arroyo - Also by this author

It was a tale of two conventions for Ally and GM Financial at the National Automobile Dealers Association’s annual get-together in January. While Ally cut what may be the last remaining link to its General Motor Acceptance Corp. roots, GM Financial touted its latest moves to fill the role Ally once held as GM’s captive finance arm.

Inside the south hall of San Francisco’s Moscone Center, Ally executives previewed a new vehicle service contract (VSC) called Ally Premiere Protection (APP), as well as a new administration platform that will allow dealers to electronically contract, rate and remit the new offering.

Doug Timmerman, president of Ally Insurance, described the new VSC as an enhanced version of the company’s General Motors Protection Plan (GMPP), a brand name the former captive will lose rights to in November 2016. He said Ally is getting ahead of that deadline to make clear its products and services are available to dealers representing all brands.

The biggest difference with APP is coverage. Whereas GMPP offered up to 10 years or 100,000 miles of coverage, APP can go up to 12 years and 150,000 miles. It also offers more options and pricing based on time in service, mileage, make and model for all vehicle brands.

Ally Insurance will begin piloting the new VSC and administration platform this month, with nationwide rollout expected to begin this summer. “The launch of Ally Premiere represents an important development in the evolution of Ally’s dealer products and services, and better positions us to respond to the needs of a diverse dealer network,” Timmerman said.

Inside Moscone North, GM Financial’s Kyle Birch touted the subprime lender-turned-captive’s busy 2014, a year in which it rolled out its first prime APR product in November and its first floorplan financing product in May. “The biggest thing for us in 2014 is we spent a lot of time and investment on bringing all our systems together, understanding that we were going to get in the prime business from an APR perspective,” he said.

The company also began working on applications that will drive a better connection between customers, GM and its dealer network — an initiative being led by Will Stacy, senior vice president of digital and technology services. “We’re trying to build integration tools with GM so you can apply for credit in an easier way through its sites and through its dealers’ sites,” Stacy said. “So the idea is 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 dealer websites that GM and Cobalt host, as well as a beefed-up customer experience with native application on iPhones, Androids and customer portals.”

The big announcement was GM’s decision to end its leasing relationship with Ally Financial and U.S. Bank, with GM Financial, which launched its first leasing product 90 days after it was purchased by GM in 2010, officially becoming the OEM’s exclusive subvented lease provider for Buick and GMC on Feb. 3.

“Cadillac will follow closely after that [in March], then Chevy,” Birch said. “By mid-year, we’ll have full lease exclusivity with all GM brands.”

The decision didn’t sit well with Ally Financial executives. “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,” said Michael Carpenter, who retired last month from his CEO post, during Ally’s Jan. 29 earnings call. “And frankly, we don’t see how auto sales are increased by having less options for consumers and dealers.”

Responding during the company’s Feb. 4 earnings call, GM Financial executives said the decision was about customer loyalty, adding that it made sense to keep those customer relationships and data within GM’s control. Keeping the profitability associated with leasing ­— GM Financial finishing 2014 with less than a 50% share of GM leases — was another factor.

When asked if those same factors would drive GM Financial into the product side, Birch said: “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.”

Comment

  1. 1. William V. Fowler [ March 21, 2015 @ 11:56AM ]

    The suggestion to build s "widget that goes on dealership sites so you can apply for a GM Financial loan" would in effect violate the CFPB requirements that a dealer show multiple offers from all the finance companies associated with a motor vehicle dealer.

    Showing one offer is fine if that is the only finance source associated with the dealer, however if the dealer is associated with multiple finance sources then all offers to finance the vehicle need to be offered at the same time.

    This is already in effect yet dealers and their financing sources are not complying and their will be many legal actions brought against dealers because of this very soon.

  2. 2. William V. Fowler [ March 21, 2015 @ 12:02PM ]

    Also Will Stacy, if you want to see a compliant way to offer your finance program for your dealers just contact me. bfowler@enetfs.net

 

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