P&A Providers & Administrators
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 gray SUV plugged into public electric-vehicle charger in parking lot
Industryby Hannah MitchellJuly 21, 2026

World EV Adoption Set to Grow

A new report says the segment, despite recent setbacks in some regions, is poised for acceleration as many countries look to reduce pollution.

Read More →
Bar chart of truck and SUV segments' weekly value change
Industryby StaffJuly 21, 2026

Black Book: Weekly Market Update

Wholesale automotive auction business stayed steady last week as bidders encountered lower prices, analysts observed.

Read More →
laptop with blue car on screen on a shopping website, Clear Costs Convert
Industryby Lauren LawrenceJuly 21, 2026

Pricing Transparency Drives Purchase Consideration

An annual study by JD Power found that clear pricing matters to consumers on automaker websites, so much so that it increases their purchase consideration.

Read More →
Ad Loading...
Bar graphic of used-car segment weekly change
Industryby StaffJuly 14, 2026

Black Book: Weekly Market Update

Used-vehicle market depreciation was the prevailing story in the wholesale market last week.

Read More →
Light-blue Fiat car parked on a sunny Chicago street
Industryby Hannah MitchellJuly 14, 2026

Smaller Is Looking Better

A growing number of Americans in the market for a new vehicle are opting for more affordable options, not waiting for market stability to bite the bullet.

Read More →
man sitting at desk using calculator with charts in front of him, to-go coffee cup on desk, rising and falling data chart in front
Industryby Lauren LawrenceJuly 14, 2026

U.S. EV Market Slowly Stabilizes

U.S. electric-vehicle interest is slowly stabilizing since a major dip in sales after last year's end of the federal EV tax credit, and hybrids remain the leading electrified power train.

Read More →
Ad Loading...
blue background, map of the world with connecting lights and an electric vehicle emblem in the middle
Industryby Lauren LawrenceJuly 8, 2026

Global EV Market Entering New Phase

Automakers are making investments to lower battery costs and optimize production to meet changing consumer needs.

Read More →
Bar chart showing week-over-week wholesale automotive price change
Industryby StaffJuly 7, 2026

Black Book Weekly Market Update

The holiday weekend, not surprisingly, put a drag on wholesale automotive activity last week, analysts observed.

Read More →
Photo of Honda CR-V SUV on two-lane road next to roadside trees
Industryby Hannah MitchellJuly 1, 2026

Auto Affordability in Context

Cox Automotive points out the complex circumstances that have led to eye-popping vehicle prices.

Read More →
Ad Loading...
Line chart of used-vehicle days to turn over past week
Industryby StaffJune 30, 2026

Black Book: Weekly Market Update

Automotive auction inventory increased last week, giving choosy bidders even more leeway.

Read More →