GM Financial,Ally swap corporate profiles
Old AmeriCredit becomes global giant
Jim Henry
Automotive News | March 10, 2014
A new and much bigger GM Financial is emerging this year -- a glob-
al, mostly prime-risk auto lender that looks a lot like the old GMAC
captive finance company.
In a mirror image of sorts, a new Ally Financial is emerging this year,
too. The new Ally is smaller and its auto finance and insurance oper-
ation is now limited to the United States. It also has a strong online
consumer banking business.
In many ways, the two financial institutions have traded places.
GM Financial, a one-time niche player in auto finance, has evolved
into a globe-circling behemoth. Ally Financial, which as GMAC was
once so large that the U.S. government felt compelled to rescue it
rather than let it fail, today is a much smaller operation focused on a
smaller number of core businesses.
Doubled in size
GM Financial used to be known as AmeriCredit
Corp. At the time, it was a publicly trad-
ed independent auto-finance company that
specialized in the subprime market.
Then, in 2010, GM acquired AmeriCredit, setting
it on a transformational path toward becoming
GM’s worldwide captive finance company.
The biggest changes are only now taking effect.
“In 2013 we were able to double the
size of our company,” Dan Berce, CEO of
GM Financial, of Fort Worth, Texas, said in a
conference call for investors and analysts.
Berce said the increase was the result of
GM Financial acquiring most of Ally Financial’s
former International Operations in Europe
and Latin America, plus growth in U.S. re-
tail leases and commercial loans.
At the end of 2013, GM Financial’s outstand-
ing consumer vehicle loans and leases, plus
commercial loans, were $33.3 billion, com-
pared with $13.3 billion a year earlier.
GM Financial should get even bigger when it
closes a previously announced deal to acquire the
former Ally joint venture operations in China.
That closing is expected this year, GM Financial said.
Once it’s fully assembled, GM Financial will
be much more of a traditional captive finance
company, a wholly owned subsidiary that of-
fers prime and subprime loans and leases, plus
commercial lending for dealers. With the addi-
tion of International Operations, GM Financial
fills the same role for GM in those markets.
“We have solidified our position as GM’s captive
auto finance company with global capabilities.
That position will be even stronger in 2014 as
we launch prime lending and commercial vehicle
lending in the U.S. about midyear,” Berce said.
Shedding, shrinking
Meanwhile, the new Ally Financial, formerly known
as GMAC Financial Services, has shrunk. Besides
selling off its International Operations, Ally also
shed its giant mortgage subsidiary, Residential
Capital, a once-thriving business that almost
pulled GMAC down with it into bankruptcy.
In 2006, GM sold majority control of GMAC but
retained a minority share. Falling auto sales, the
credit crisis and the collapse of subprime mortgag-
es leading up to the recession forced GMAC into
needing a U.S. government bailout in late 2008.
Ally allowed its ResCap unit to file for bank-
ruptcy protection in 2012, but the ResCap
bankruptcy plan wasn’t approved in U.S.
Bankruptcy Court until December 2013. The
court’s ruling finally left Ally free of its legacy
obligations to ResCap, the company said.
Also in December 2013, GM sold its last
remaining 8.5 percent stake in Ally.
This year Ally Financial’s top priority is to buy
out its remaining U.S. Treasury ownership
-- which was 37 percent as of Feb. 6 -- and
go public. That would leave Ally without GM
or government ownership for the first time.
“Free at last, free at last!” said Ally CEO
Michael Carpenter, in an interview at the
National Automobile Dealers Association
convention in New Orleans in January.
“If you look back at 2013 it was an incredibly
eventful year for us. It was a seminal year, espe-
cially in the fourth quarter,” Carpenter said, “much
of which was setting the stage for the future.”
Carpenter said that as a smaller, inde-
pendent company, Ally could contin-
ue to lower costs to match its size.
As of Dec. 31, 2013, Ally had 7,100 employees,
down from 10,600 a year earlier. The figures in-
clude operations that had been put up for sale.
Ally plans to continue to pursue business with
dealers and automakers, including former partners
GM and Chrysler Group, only with less reliance
on deals supported by carmaker incentives. Ally
is also working to increase used-vehicle and
subprime loans, plus leasing for all brands.
Ally also retains its insurance operations, which
provides commercial insurance for dealers, plus
F&I products, including extended-service con-
tracts aimed at consumers via dealerships.
You can reach Jim Henry at
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