Ally CEO: We have only 1 business -- auto

Jim Henry
Automotive News -- May 23, 2012 - 8:14 am ET
Ally Financial CEO Michael Carpenter: "We will reduce our cost of funds over time. We will free up capital. This will result in an even stronger auto franchise."

Ally Financial Inc. has one focus now, CEO Michael Carpenter says: U.S. auto lending.

That auto emphasis, in fact, is one of the reasons Ally's ailing mortgage unit, ResCap, filed for bankruptcy protection last week, he says.

As of the first quarter, Ally had relationships with nearly 14,000 U.S. dealerships, an increase of about 1,000 from a year earlier. Ally's biggest customers are General Motors and Chrysler Group. Ally is the preferred lender for both manufacturers.

Carpenter spoke about Ally's auto lending business last week with Automotive News Special Correspondent Jim Henry.

You've compared Ally to "category killers" in other industries. Your categories are auto lending and online banking. So ResCap was in the way?

We only have one business. It's a big business, and that's the auto franchise. Ally Bank is a very important part of how we finance it.

What makes Ally different from other banks?

Most banks, if you want subprime, they might say, "On Mondays, Wednesdays and Fridays, we do subprime; on Tuesdays and Thursdays, we do prime" or whatever. That is, when the market is good. But we're there every day.

But you're keeping your U.S. insurance operation, which includes extended-service contracts and other insurance-like F&I products.

Yes, we are. We believe in offering our dealer customers every financial product they need. We finance the entire credit spectrum. We offer leases and loans. We run auctions. We insure vehicles on the lot. We offer insurance products they can sell to their customers.

What's in it for dealers? Is it that if you can lower your cost of funds, you'll be able to offer lower rates?

It really is just about that straightforward. ... We will reduce our cost of funds over time. We will free up capital. This will result in an even stronger auto franchise. ... The reason ResCap went bankrupt, the reason we're selling the international operations, is to make the U.S. business even stronger.

You can reach Jim Henry at autonews@crain.com. Related LinksReaders are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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