GMAC to Change Corporate Name to Ally After Posting Q1 Profit

GMAC Financial Services, benefiting from improved U.S. auto sales, said today it posted a profit of $162 million during the first quarter and told analysts that it will change its corporate name to Ally Financial Inc., Automotive News reported.

GMAC, which lost $10 billion in 2009, has not posted a net profit since the fourth quarter of 2008.

The switch to Ally, on May 10, is no surprise, but will not affect GMAC's dealer network in the foreseeable future. Though the auto finance division may eventually use the Ally brand, the lender's automotive operations will continue to do business under the GMAC name, the company told dealers earlier today.

GMAC has a license from General Motors to use the name "GMAC" for its automotive operations until 2016.

The company already uses the name “Ally Bank” for its online banking portal.

In February, GMAC reached an agreement with the online credit application network DealerTrack allowing the lender to offer retail financing through dealers of all makes.

Carpenter, 63, is trying to make GMAC profitable by renewing its focus on auto financing after losses on mortgages led to three U.S. bailouts totaling $17.3 billion. The government holds a 56 percent stake.

The broader auto customer base, an improved auto credit market and improvements in GMAC's home mortgage business strengthened the company's financial results. GMAC has exited the mortgage business in Europe.

The company reported first-quarter net income of $162 million, up from a net loss of $675 million in the first quarter of 2009. GMAC said retail deposits at Ally Bank amounted to $17.7 billion on March 31, compared with $16.9 billion at the end of 2009.

GMAC's global automotive business, including insurance products, earned $846 million, up from $660 million a year ago and $309 million in the fourth quarter of 2009. The auto unit has been profitable for five straight quarters.

Consumer loan and lease originations totaled $8.2 billion, the same amount as in the fourth quarter of last year and up from the $3.7 billion in contracts written in the first quarter of 2009.

Lease programs helped offset weaker auto sales in January and February and helped boost retail penetration rates for GM and Chrysler Group. GMAC financed 34 percent of GM's and 42 percent of Chrysler's volume.

Higher used-vehicle values also slashed GMAC's losses on repossessed vehicles. Globally, the percentage of auto loans 30 days past due dropped to 2.87 percent in the first quarter from 3.48 percent in the fourth quarter of 2009. In North America, 3.07 percent of the auto loans were 30 days past due, down from 3.92 percent in the final quarter last year.

GMAC's income from insurance products benefited as the company streamlined the business unit to focus on dealer-oriented products such as extended service plans and dealer inventory insurance. GMAC earned $621 million on insurance products in the first quarter, up from $511 million a year ago.