Tag Archive | "Ally Financial"

GM Financial Prepares for ‘CFPB Exam’

Fort Worth, Texas — During its quarterly investor call on July 25, General Motors Financial Co. (GM Financial) announced earnings of $178 million for the second quarter of 2013, compared to $137 million in the same period last year. Officials also commented on the company’s planned roll out of a prime product, its acquisition of Ally Financial’s International business units and the Consumer Financial Protection Bureau (CFPB)’s expected impact on auto finance.

Loan originations for the captive finance company were at $3.3 billion for the quarter, with North America at $2.2 billion and the company’s international business at $1.1 billion. Officials said the company closed a significant portion of its acquisition of Ally Financial’s international assets during the quarter, including Mexico, Chile, Colombia, and its European operations.

“With the international acquisition, our business has moved significantly in the direction of being a true captive finance company,” said Dan Berce, president and CEO, GM Financial.

Upon the completion of the international acquisition, GM Financial will be in 19 countries, servicing more than 9,000 dealers, with earning assets of more than $30 billion and a footprint that covers 80 percent of the sales territories for GM.

Officials also reported that accounts 31 to 60 days and more than 60 days delinquent accounted for 5.3 and 1.8 percent, respectively, of the company’s portfolio in the quarter ending June 30. Berce said the company is seeing typical seasonal trends, with March and June quarters being the strongest and September and December being weaker.

The company has also beefed up its compliance efforts in anticipation of an “inevitable CFPB exam.”

“A few areas the CFPB is focusing on are consumer complaints and third-party vendor management,” Berce said. “We have refocused on each of those areas, like every other consumer finance company.

“The auto-finance specific, probably the area that the CFPB has its sights on the most is the payment rate participation to dealers when we source business,” Berce added. “I think the CFPB, if it were up to them, they would rather see flat rates, flat payments to dealers for sourcing business rather than a rate participation. It remains to be seen how that shakes out, but I don’t think it will have much of an impact on our economics, whether we pay flat or participation. The whole industry will change together, if that’s the way the cards fall.”

In its last quarterly investor call, GM Financial said it expects to roll out a prime product in early 2014. Plans for the rollout are still on track for first quarter of 2014.

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Ally Launches Web-based Training Platform for Dealers

Detroit – Ally Financial introduced a new, interactive Web-based training site for dealers called the Performance Development Center, which provides dealership employees customized training specifically designed for their dealership role. The site was created to leverage Ally’s auto experience by providing easily accessible training designed with a focus on dealership process and profitability. It builds upon Ally’s dealer training offerings.

“The Performance Development Center supports Ally’s dedication to dealers by delivering valuable training on a wide array of topics that can help improve their sales and financing effectiveness,” said Kathy Ruble, Ally vice president, Dealership Development Services. “Last year, Ally trained more than 14,000 dealership personnel with its instructor-led training, including in-dealership classes and those offered via webinar. The new site allows Ally to do even more targeted training efforts so we can tailor our approach to meet the needs of a new generation of learners.”

Offering 24-hour access, the site currently features 15 virtual on-demand training courses with more than 35 modules covering a wide range of topics that include Commercial Services Group Business Vehicle Certification; Equal Credit Opportunity Act (ECOA) Awareness; NetQuote and Residual Value Lease Guide; and Retail Process Overview training. The online courses were designed with short modules, most of which are under 20 minutes, tailored for busy dealership personnel.

The site provides registered learners the opportunity to test their skills through interactive review quizzes, and they are able to print reference materials to review offline. Additionally, a history of completed training courses is maintained on the Performance Development Center for every registered learner, and upon completion of a course employees will receive a printable certification.

The Performance Development Center is available to all dealers and will be updated with new content throughout the year.

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Ally Financial Launches Mobile App Designed with Dealer Input

Detroit – SmartAuction, Ally Financial’s online used vehicle auction, launched a mobile app designed utilizing dealer input. Users can now search for vehicles, communicate with sellers, negotiate pricing and make bids over Android and Apple-based smartphones.

“By including dealers as part of the development team we were able to build an intuitive tool that enhances the SmartAuction online market and makes it easier for dealers to find the right vehicles for their markets,” said Steve Kapusta, vice president of SmartAuction.

“Working in the automotive business means you’re rarely sitting behind a desk,” Kapusta added. “Our users told us they needed to be connected to our online market anytime, anywhere, and the new SmartAuction Mobile app delivers the solution to meet that challenge.”

The SmartAuction mobile app includes the following features:

  • Vehicle Search – Conduct basic and advanced searches (make, model, trim, year, drivetrain, etc.) and access saved searches from a user profile.
  • Search Results – Users can sort through specific vehicle criteria on their mobile device (i.e., guide book values, year-make-model, mileage, etc.) and results can be sorted based on preference.
  • Vehicle Details – A wide variety of vehicle information is available, including: Interior and Exterior images, vehicle condition and damage disclosures, CARFAX and AutoCheck reports (as available), wholesale guide book values, vehicle equipment and accessory details, seller information and promotion and incentive eligibility details.
  • Communication Direct to Seller – Users can communicate with sellers on a vehicle directly from the mobile app.
  • Bid List – Users can place bids directly from the mobile app, including placing an AutoBid, Buy Now or Make an Offer.
  • Offers – Users have the ability to conduct private, one-on-one negotiation directly between the buyer and seller. Users can also view and respond to pending offers as a buyer or seller.
  • Vehicle Posting Updates – Vehicle sellers can update the vehicle price and auction status of a posting directly from the mobile app.

“Continuously improving the customer experience is what allows us to remain a leading resource for dealers and consignors. We’re very excited to begin offering SmartAuction Mobile to our customers across the country,” Kapusta said.

Registered SmartAuction users can download the app online at the Apple Store or the Android Google Play store.

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CFPB Investigating Ally Financial

Washington — Ally Financial, in its March 1 filing with the Securities and Exchange Commission (SEC), revealed that it was one of the finance sources warned by the Consumer Financial Protection Bureau that it could face lawsuits under the Equal Credit Opportunity Act (ECOA).

“The CFPB has recently advised us that they are investigating certain [parts] of our retail financing practices,” read the filing. “It is possible that this could result in actions against us.”

The filing didn’t offer any further details regarding the CFPB’s actions, and company officials declined to comment on the matter.

In February, Bloomberg, citing unnamed sources, reported that the CFPB alerted “at least four” banking institutions that they could face lawsuits related to their policies that allow auto dealers to mark up the interest rates on retail installment sales transactions in exchange for services rendered. The bureau, through speeches, alleged these policies have caused a disparate impact and caused members of minority groups to pay higher interest rates.

Bill Himpler, executive vice president of the American Financial Services Association, said that the association had yet to see the letters, but said he believed Bloomberg’s report was “close to accurate. We feel fairly confident that letters have gone out.”

The CFPB has not returned calls seeking comment, and has yet to publicly confirm the warnings.

Ally’s filing with the SEC is the first confirmation of the CFPB’s actions, which legal insiders say signals an imminent crackdown on the auto industry. It’s a move experts have been predicting since the CFPB was formed in 2011 as a result of the Dodd–Frank Wall Street Reform and Consumer Protection Act.

Financial institutions are also reacting. Through a bulletin faxed to dealers in late February, Chase announced a new dealer rate participation monitoring program. Under the program, Chase will periodically monitor dealer pricing on retail installment contracts it purchases from dealerships.

“Our dealer monitoring program reaffirms our commitment to fair lending and supports our indirect auto lending activities,” a Chase spokesperson said.

According to the bulletin, if a dealer is found to have different pricing for protected classes, Chase will require them to provide an explanation, and “will consider taking further action” if it is not satisfactory.

Thomas B. Hudson, a partner in the law firm of Hudson Cook LLP, said the CFPB’s approach is inherently flawed, if reports are true. But if the bureau’s legal strategy is successful, he speculated that “finance companies and banks will end up imposing a lot more supervision and control over dealers.”

However, this outcome is far from inevitable, Hudson said. Alleging that banking and finance company policies have allowed dealers to create a disparate impact — which holds that practices that have a disproportionate adverse impact on members of a minority group are discriminatory and illegal — could be a hard sell.

“There are people on the legal side of the credit business who don’t think it’s appropriate to graft that concept on to the Equal Credit and Opportunity Act,” he explained.

The ECOA takes its definition of disparate impact discrimination from Supreme Court cases concerning employment, including the 1971 case of Griggs vs. Duke Power Co. and the 1975 case of Albemarle Paper Co. vs. Moody. Prior to the Griggs decision, which found that Duke Power’s employment requirements did not pertain to applicants’ ability to perform the job, employers did not have to separate intentional wrongs from unintentional wrongs if they appeared to treat all applicants equally.

Using the disparate impact theory, the CFPB has taken the position that violations of the ECOA can be pursued based solely on statistics that suggest an otherwise neutral policy disparately affects minorities. Consequently, the government does not have to prove intent to discriminate to launch claims related to the ECOA.

“The concern is the banks are never face to face with a customer. The banks don’t know the customer’s race or ethnicity or age or sex,” Hudson said. “The dealer is sitting there across the desk from these folks, so if there’s discrimination in the bank’s portfolio, you would think that it was there because dealers were marking up in a discretionary manner, to a greater degree, for protected classes than for others. And if that’s the case, then the bureau is going to sit there and scratch its head and say, ‘Okay, how do we fix this?’”

No federal court of appeals has yet determined whether the ECOA permits disparate impact claims, although two have questioned its appropriateness.

Last month, the CFPB Director Richard Cordray spoke to at a National Association of Attorneys General (NAAG)’s meeting. While he did not confirm the CFPB’s reported actions, he did make clear the bureau’s interest on how interest rates are set for minority buyers.

“When consumers and lenders sit down to discuss loans, consumers are often unaware what options may or should be available to them,” he said. “If a rate or a price is quoted, they do not know whether that quote accurately depicts their actual position in the loan market.

“Interest rates can and do vary based on the characteristics of the borrower,” he continued. “Lender policies that provide incentives for brokers or loan officers to negotiate higher rates have often been shown to result in African-American and Hispanic borrowers paying more for mortgages and auto loans.”

Cordray said the NAAG has been working closely with the CFPB since its inception. “The NAAG working groups on such topics as student loans and auto-loan financing have fostered important conversations and allowed for closer and more effective coordination,” Cordray stated.

Legal insiders believe that the CFPB’s analysis of retail pricing for portfolios of retail installment sale contracts has the potential to yield false positives for a disparate impact. For example, if two dealerships both apply their pricing policies consistently, but one charges a higher rate, there is still a potential for disparate impact if their customer demographics differ.

As Hudson pointed out, the Supreme Court has yet to determine the validity of disparate impact theory as it relates to the ECOA, but “until it does, the bureau is going to pretend like it’s live ammunition.”

“They are going to use it,” he said. “They are going to continue to assume that it’s one of their tools, and they’re going to proceed as if it’s a valid theory.”

If Cordray’s speech to members of the NAAG is any indication, it appears that’s what the CFPB intends to do. “We made it clear last year that — like the other banking regulators and the Justice Department — we will pursue discrimination in consumer financial markets based on disparate impact as well as on intentional violations,” he said. “From the perspective of a consumer disadvantaged by policies that have a discriminatory effect, it makes no practical difference whether or not a lender consciously intended to discriminate.”

Via F&I Showroom

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Ally Financial Launches New Automotive Ad Campaign

Detroit — Ally Financial’s latest advertising campaign for its U.S. automotive business features dealers sharing stories of business and civic accomplishments while noting how Ally helped them achieve success.

“Ally. It’s more than our name, it’s our promise,” is the company’s new theme. In the ads, Ally’s expertise in the auto industry is demonstrated through examples of how the company’s leaders and employees support dealers in selling more vehicles and improving their F&I effectiveness.

“We believe this campaign reflects our efforts to deliver real value that helps dealers build their brands,” said Andrea Riley, chief marketing officer for Dealer Financial Services at Ally. “Our name is our promise in the marketplace, and this campaign and approach is just another example of how Ally delivers on that promise.”

The campaign will span print and digital channels, and was developed with advertising agency Duffey Petrosky of Farmington Hills, Mich.

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Ally Financial Beefs Up Dealer Services

Detroit — Ally Financial has enhanced services offered to dealers through its Performance Development Center and Relationship Management Center. Dealers will be offered more training and new tools to help drive customers into the showroom.

“We received tremendous response to our training programs last year, with more than 12,000 dealership personnel participating in Ally courses such as leasing and F&I management,” said Tim Russi, president of Auto Finance at Ally. “Training is an extension of our indirect business model, and helps dealers ensure that employees stay up to speed on our products and financing best practices, while honing their overall sales and business skills.”

Ally also announced that it has revamped its lead-generation system to take better advantage of the two million leads it currently provides manufacturers and their dealers each month. Not only do the enhancements provide dealers with direct access to leads, they also provide dealers with a professional marketing fulfillment service.

“This will help Ally increase its financing contract volume, while enabling dealers to better service their valued customers,” Russi said.

Ally’s Performance Development Center is a comprehensive, web-based education and training platform for dealership personnel. Services include:

• Training recommendations tailored to job functions within the dealership
• 24/7 access to virtual on-demand courses and the ability to schedule instructor-led, in-dealership training
• Courses on leasing, legal awareness, F&I management, sales skills, menu selling, retail financing products, and more
• Dealer and staff certification for key curricula, along with portable training history that allows dealers to track employee performance development

Ally’s courses range from online programs to regional and in-dealership, instructor-led sessions. The services are offered to franchise and independent dealers selling new and/or used vehicles.

Ally’s Relationship Management Center provides tailored customer manifests and marketing tools for dealers to reach potential prospects.

“Our Relationship Management Center is a one-stop shop for obtaining leads to better manage customer loyalty and retention,” said Kathy Ruble, director of Alliance Sales, Performance and Development at Ally. “It provides access to materials for professional direct mail and email marketing campaigns with a few clicks of the mouse.”

The national launch of Ally’s enhanced Performance Development Center will begin March 1, and the Relationship Management Center will be available on April 1.

“Reaching out to customers, offering the right financing products for the transaction, and strengthening the strategic management of a dealership’s operations can make a significant difference in both customer satisfaction and the bottom line,” Russi said. “As the dealer’s ally, we understand the auto business and are well positioned to offer performance development and lead management expertise as part of our core auto finance business.”

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