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An Interview with Rob Glander

Rob Glander, CEO and president, GWC Warranty Corporation, is an interesting person. He seems to be one of those rare people who live life to the fullest. When talking to Rob, he is just as passionate about providing the best service in the business as he is about his family, books, music and a sundry of other topics, all of which he also discusses on his blog. He lists his biggest accomplishment in life as convincing the most beautiful woman in Madison to marry him.

Glander writes a blog at GWCWarranty.com that makes for an engaging read. His humor, intellect and story-telling ability will draw you in. You will quickly find yourself reading one entry after another as he draws parallels from everyday life events to the principles of running a successful business. He also recommends a wide variety of books, TV series and movies to readers. The topics range from the history of the circus, to stories of bank robbers and punk rock stars, and from Nobel-prize-winning economists to the latest political thriller. Glander says the blog “humanizes” the company a little and has been helpful in recruiting new employees and dealer and agent customers.

On his blog, Glander talks about how he joined Twitter “primarily to keep with the thoughts of musicians, actors and other creative types.” But soon, he found business colleagues were following his tweets. Glander describes it as “a bit jarring.” He likens the experience to an episode of Seinfeld, where George’s compartmentalized worlds collide. Glander then invites readers to tweet him with their own experiences engaging in the new social media universe while maintaining personal dignity.

Certainly, Glander has so far achieved many significant things in life. In 2009, GWC recruited Glander to help guide the company out of the depths of the recession. He joined and spent most of 2010 recruiting a top leadership team to re-engineer the entire company, modernizing it from a very traditional, family-run type of business into a more professional operation. Before that, he worked in a variety of finance, operational management, marketing and executive roles at GM/GMAC, Chase Auto Finance, and Barclays Bank after earning a MBA from Northwestern.

Glander’s energy and enthusiasm for life spill over into everything he talks about. When asked about his company, he explains with pride that it was founded nearly 20 years ago, and they are a leading provider of vehicle service contracts and a trusted partner to over 20,000 independent and franchised car dealerships. As he explains the workings of his company and services they offer, he speaks fondly as if he is a proud father recounting the achievements of his children. It is clear that Glander takes his company’s slogan of, “No Worries. Just Drive,” as a personal driving mission.

Over the years, GWC has evolved into a company whose products are sold by both an employee-based sales force and what Glander describes as “a network of some of the most reputable agents in the country.” They offer a full suite of vehicle service contract products, including stated component and exclusionary policies and wraps that dovetail with manufacturer warranties. They have expanded their financial backing to include majority ownership by Stone Point Capital and product backing by Assurant. On the service side, Glander explained, their in-house claims department is co-located with their headquarters in Wilkes-Barre, PA and is staffed by ASE-certified adjusters. “This means that customers, dealers and service shops are always in close communication. The arrangement allows our professionally trained representatives to provide the very best service in the business.”

With over a hundred companies competing in the vehicle service contract industry, Glander says very few do things well and do them honestly. “GWC is proud to be one of the most trusted names in the business and to partner with agents and dealerships who also treat their customers well. We offer our dealers and their customers a “No Worries” experience through outstanding service and expansive coverage options. We also offer agents a “No Worries” experience by allowing them to focus on building their business, spending time on dealer relationships, not dealer problems.”

When GWC establishes relationships with agents, Glander explained, they offer them exclusivity in an area. This eliminates the frustrations many agents face when they are forced to compete with other agents selling the identical product from the same company – a situation that often times forces agents to cut their commissions in order to compete.

While GWC has partnerships with agents, dealerships and finance companies, they have traditionally served independent dealers. In recent years, however, they have experienced rapid growth among franchised dealerships. As those franchised dealerships sell more and more used vehicles, particularly 60,000 plus mileage vehicles, Glander says they look for a VSC provider with experience in underwriting and administering products appropriate for those vehicles. They also enjoy the opportunity to keep some of those riskier vehicles out of their reinsurance pools and let the experts manage the risk. This is a niche Glander says GWC serves especially well and they do so with affordable pricing.

When asked what he views as the biggest issues facing the industry today, Glander shared his concerns about how easy it is for VSC companies to start up in some states. “They are a threat to our industry’s reputation. I’ve actually had competitors tell me that they’re funding their business on a ‘pay-as-you-go’ basis, which is insane and will lead to a disaster for their dealers and end customers. GWC has never operated that way, even in its earliest days. We have always been over-reserved and strived to be the players in the ‘white hats’ in our industry. We pay claims! It seems obvious, but in this business, where ‘bottom feeder’ companies start up with very little financial backing and ultimately fail, we have a long history of living up to our promises. Unfortunately, these disreputable approaches have led to some of the regulatory heartburn we are all feeling today.”

In order to succeed in today’s market, Glander says you need to be focused on treating customers honestly and fairly, in part because of regulation but more importantly just because it’s the right thing to do. He believes that many of the excesses of the past have been wrung out of the system and the companies that are succeeding are doing it the right way. For a company to continue thriving in the future, Glander says they will have to invest in talent, training and technology to bring a truly superior product to their customers. “That’s what GWC is focused on and it’s why we’re attracting like-minded agents who share our business values.”

When Glander is not at work, you might be surprised to find him frequenting the local, or international music scene with his kids. “I met my wife in college at Merlyn’s, a legendary punk rock club, and to this day I remain an unapologetic indie-rock music geek. I try to see bands at clubs and festivals, even if it means I’m one of the oldest people there. There’s nothing like spending three days in the California desert at Coachella with your daughter or traveling across the U.K. from club to club with your son to stay connected to your kids while recharging your batteries.”

What advice would Glander give to someone new to the industry? “Join a company with an exceptional leadership team, strategy and culture. If you find that, you will have the opportunity to learn from the best and apply your strengths immediately… You spend a good portion of your life at work, so you better give it the best you have to offer. If you can’t say that you’re proud of what you’re doing, then you’re either doing the wrong kind of work, or you’re the wrong kind of person.”

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GM Financial Not Looking to Replace GMAC

GM Financial’s rollout of a prime leasing program in 16 states may seem to indicate that the company formerly known as AmeriCredit is leaving its roots behind. Company officials, however, maintain that the former subprime finance company is merely sticking with the game plan General Motors set forth when it purchased the company last October: fill the finance gaps.

Since successfully piloting a new GM prime lease program in Ohio last December, the company has expanded the lease offering into 15 additional states — with eight states added last week. The goal now is to expand the program nationwide by this summer.

“We have been, historically, a subprime retail installment lender,” said Caitlin DeYoung, spokesperson for GM Financial. “When we were acquired by GM, the purpose was to fill in the financing gaps. Our main focus was to get a leasing program out and prime leasing was the first priority.”

Aside from Ohio, the prime lease program is now available in Connecticut, Delaware, Indiana, Kentucky, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia and West Virginia. reported F&I and Showroom.

Officials said the company also is eyeing a return to the Canadian market by the middle of the year or sooner, and has rehired Howard Cobham, its former Canadian auto finance executive, to lead that effort. His first order of business will be to roll out the prime leasing program in that market.

DeYoung said the company also is considering an expansion of its lease offerings to customers downstream on the credit spectrum. The company spokeswoman said that won’t happen until the prime program is rolled out nationally.

As for retail installment contracts, DeYoung said originations will outpace what AmeriCredit did last year, but would not offer a target increase. She added that although GM Financial is being positioned to help GM dealers, the former independent finance company will continue to serve non-GM dealers under the AmeriCredit banner.

“We are building out different products for GM dealers, but we have not stated what our target is on originations. It’ll definitely be an increase from the prior year,” DeYoung said. “Our current infrastructure is not built to take on 80 percent of GM’s business and we’re not looking to do that. What we are looking to do is provide a competitive financing option for GM dealers.”

The two top executives for GM Financial, Dan Berce, and Ally Financial Inc., Tim Russi, underscored this goal earlier this month in San Francisco at the American Financial Services Association’s 2011 Vehicle Finance Conference and Exposition, when they appeared together for the event’s annual CEO panel.

Russi talked about the benefits of Ally’s bank-holding status, saying that the company has been able to diversify its sources of funding. He also talked about the company’s recent successes in the securitization market, and acknowledged that the company must continue to mend dealer relationships that were strained during the downturn.

Berce described to the packed audience how AmeriCredit went from the brink of collapse in the spring of 2008 to survival in early 2009. And after describing the moment he learned GM was interested in purchasing the company, he fielded a question from the audience on whether his company and Ally Financial could coexist.

“GM bought us not to be the new GMAC; they bought us to plug the gaps,” Berce responded. “They bought us to bring back leasing.”

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GM Again Sees Need for GMAC

DETROIT — General Motors Co. is revisiting the idea of buying back part of its former GMAC auto loan business, half a year after it acquired a subprime loan company to help fill the role of an in-house lender, according to three people familiar with the situation.

GM executives are weighing the idea of a new approach to Ally Financial, the renamed GMAC, to give the auto maker’s dealers better access to wholesale credit, reported The Wall Street Journal.

Six months ago Ally turned down GM’s $5 billion offer for its wholesale business.

Instead, GM purchased Americredit Corp. for $3.5 billion but that lender, now part of GM Financial, is primarily in subprime consumer financing.

So far, GM hasn’t approached Ally Financial about the potential for a purchase, and there is no indication whether the lender would be open to a proposal, the people familiar with the situation said.

The U.S. government—which owns 74 percent of Ally and 26.5 percent of GM—could play a role in any such arrangement, the people said.

Ally ended up needing a government bailout after its mortgage business suffered major losses; its car-financing business remained relatively solid.

Ally and the Treasury declined to comment.

GM, far more than its rivals, depends on outside banks for the majority of its consumer lending and dealer financing. That leaves GM more dependent and exposed to risk than competitors that are able to use their in-house lenders to bolster sales in tough times.

In 2008, a move by Ally, then called GMAC, to dramatically restrict leasing amid the U.S. financial crisis helped trigger the spiral that sent GM into bankruptcy in 2009.

Ally, which received $17.2 billion in U.S. bailout funds, is readying an initial public offering for as soon as this year in which the Treasury would sell its stake in the bank. Investors will likely seek clarity on Ally’s relationship with GM and the future of its auto loan business before the company returns to the public markets.

GM Chief Executive Daniel Akerson, a former private equity deal maker, is in favor of a renewed approach to Ally, according to one of the people.

Dealers, who pay for cars and trucks when they arrive in showrooms, use wholesale credit to finance that inventory. If dealers are unable to access credit or are forced to pay high rates, they risk being unable to obtain vehicles.

GM executives want to expand its in-house lending business so the company is less vulnerable to market fluctuations, these people said.

In a downturn, “we might be exposed” to the risk of not having enough wholesale financing for dealers, GM finance chief Chris Liddell said in an interview Monday at the Detroit auto show. “It’s critical we have credit flowing in those times.”

While Mr. Liddell said he is reluctant to take a step back into the business of being a full-line lender he would consider a smaller approach.

“I am philosophically against having a $100 billion finance company attached to a $50 billion to $60 billion car company,” he said. “In a [market] downturn, we might be exposed. It’s critical we have credit flowing through those times.”

AmeriCredit, over which GM has total control, has around $10 billion in assets. Mr. Liddell said AmeriCredit could grow to around $15 billion, but not more. The captive lenders at Ford Motor Co. and Toyota Motor Corp. have assets of $108 billion and $84 billion, respectively.

“Returning to captive financing is likely a prerequisite for maintaining U.S. market share over 20 percent longer term,” Morgan Stanley analyst Adam Jonas wrote in a recent research note. “While impossible to quantify, we believe GM is ceding hundreds of basis points of U.S. market share to competitors with integrated finance operations.”

A plan to buy back the former GMAC auto lending business could have significant hurdles. Ally Chief Executive Michael A. Carpenter shot down GM’s earlier offer for its wholesale-lending operation.

Ally, under Mr. Carpenter, has made it a goal to increase the company’s auto loan operation, which also is the primary lender for Chrysler LLC.

Contention between former GM CEO Edward E. Whitacre Jr. and Mr. Carpenter further complicated the auto maker’s efforts to cut a deal with Ally. The relationship between the two companies could be different with GM’s new CEO, Mr. Akerson.

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GMAC to Sell $618M of Auto Loan-backed Bonds

GMAC Bank, a unit of Ally Financial Inc., plans to sell 446.5 million euros ($618 million) of securities backed by German auto loans in its first public offering of the debt in Europe.

The top-rated bonds will have an expected average life of 1.6 years, three people told The Detroit News. They declined to be identified before the deal is completed. Deutsche Bank AG and Royal Bank of Scotland Group Plc are managing the transaction.

The securities will be sold through GMAC E-CARAT 2010, a specially created issuing vehicle. The issue will total 507 million euros and two lower-rated portions may be retained, the people said.

European lenders are increasing sales of asset-backed securities as rewards demanded by investors to buy the debt declines. Banks sold a total 13.1 billion euros of asset-backed bonds in September, mostly linked to mortgages and auto loans, in the busiest month since the second half of 2007, according to JPMorgan Chase & Co.

Investors demand about 80 basis points more than the euro interbank offered rate to buy top-rated bonds backed by European auto loans compared with a spread of 135 basis points at the end of 2009, according to JPMorgan Chase & Co data.

GMAC will meet investors next week before opening books on the deal, the people said. Ally Financial sold $584.9 million of bonds backed by loans in August to finance U.S. auto dealer inventories, a person familiar with the transaction told The Detroit News.

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Ally Financial Adopts ‘Ally’ Brand for Auto Finance Business

DETROIT — Ally Financial Inc. has announced that it will rebrand its GMAC consumer and dealer-related auto finance operations in the United States, Canada and Mexico and begin using the Ally name.

This follows the transition of the corporate entity to Ally Financial Inc. in May. The rebranding of the auto finance operations in these markets will take effect in August.

The Ally brand will be used for auto financing activities in the three North American markets, including activities to support the following manufacturers: General Motors, Chrysler, Saab, Thor Industries and FIAT Mexico.

“The move to the Ally name allows us to invest in a brand that we own and can build upon for the long term,” said Ally President Bill Muir. “An ally is someone you rely on to support you, and our new brand embodies our 90-year heritage as a trusted finance source for the automotive industry.”

In connection with the rebranding, Ally will be making a series of enhancements to the customer experience beginning with:

Simplifying and streamlining consumer materials and online services to offer a more straightforward approach to auto financing

Investing in enhancements to the customer service process

Offering financial tools to simplify the payment calculation process

Providing opportunities to co-brand and customize certain consumer materials with information from the manufacturer and the dealer

“While our name has changed, our primary focus and core business continues to be automotive financial services,” said Muir. “Our dealer customers and auto partners can count on our ongoing commitment to their success.”

As one of the largest automotive finance companies in the world, Ally extended more than $16 billion of credit to retail customers in the first half of 2010 in the U.S., Canada and Mexico, which represents an increase in originations of more than 120 percent from the first half of 2009. For the first six months of 2010, the company extended an average of approximately $2 billion of credit per month to consumers in the U.S.

Chris Liddell, chief financial officer of General Motors, said: “As we enter an exciting new chapter in GM’s history, Ally remains an important partner and auto financing provider for GM customers. We look forward to continuing that relationship.”

Richard Palmer, CFO of Chrysler Group LLC, added: “In taking over the financing of so many Chrysler dealers in such a short time Ally has shown itself to be a strong partner for Chrysler and our dealership network. Ally has proven to be a trusted and reliable source of financing with an in-depth knowledge of the auto industry.”

The company’s U.S.-based auto finance products and services will transition from GMAC to Ally Financial on Aug. 23. The auto finance operations in Mexico and Canada will adopt the name Ally Credit on Aug. 16 and Aug. 23, respectively. There will be no change to current customer accounts or billing cycles. Ally’s auto financing operations outside of North America will continue to operate under the GMAC brand as options for further use of the brand are evaluated.

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GMAC Will Be Saab's Preferred Lender

Spyker Cars N.V., which recently bought Saab Automobile from General Motors Co., has chosen GMAC Financial Services as the preferred lender for its 500 Saab dealers in North America and globally, Automotive News reported.

GMAC’s preferred lender agreement with Spyker takes effect immediately and calls for GMAC to supply dealers with inventory financing and retail auto loans. Auto leasing is excluded from the arrangement, though GMAC is considering offering leases in some markets, GMAC spokesman Tony Sapienza said.

GMAC already provided retail financing through all the Saab dealers and has provided inventory financing to a majority of them, Sapienza said. The dealers can continue to operate under their existing lending agreements with GMAC, he said.

“We’ve had a long-term relationship with these dealers when they were a part of GM,” Sapienza said. “It’s an easy transition.”

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