Ally Financial Inc. is going through a phase:
It’s phasing in Ally Premier Protection brand for service contracts and other F&I products, plus an updated technology platform to help market and administer them. At the same time, it’s phasing out its use of the GM Protection Plan brand name.
Ally owns the right to use the GM Protection Plan name through November 2016. That’s a legacy from the past, when Ally was GM’s captive finance company, GMAC. Well before the deadline, Ally is getting a head start rolling out its own F&I products.
Ally’s use of the GM Protection Plan brand is causing some confusion.
For one thing, GM no longer owns even a minority share in Ally. Second, GM is pushing its own F&I products, which carry the Buick, Cadillac, Chevrolet and GMC brand names. Part of GM’s pitch to consumers is that its F&I products are factory-backed. Ally selling the GM Protection Plan adds to the confusion.
Ally Insurance President Doug Timmerman acknowledged that Ally Insurance hasn’t “told our story very well” to non-GM dealerships. He discussed his company’s changes with Automotive News Special Correspondent Jim Henry at the NADA convention in San Francisco last week.
What does the rollout of your new branded F&I products look like?
There’s a pilot going on at approximately 60 dealerships starting in March. The full-blown, nationwide rollout will start this summer. The rollout, really, will run through the balance of 2015, and also into 2016.
Are you adding new products?
We are adding significant enhancements. For instance, we will have a 12-year, 150,000-mile service contract. There was a bit of a gap between what we were offering and what some people are looking for. Vehicles are older than they used to be, and mileage has been trending up as well.
What was the maximum before?
It was 10 years, 100,000 miles. There are going to be a lot more options, a lot more variations for model years and mileage.
How do you handle pricing?
All our pricing is based on time in service, mileage, make, model, and for all the different vehicle platforms.
Your F&I products are all in-house, not third-party or private-label, right?
We are the administrator, the insurer and the obligor, yes. That’s important for consumers, and also very important for dealers.
Do you offer reinsurance, same as before?
It’s very similar to what we had before. If you’re a reinsurance dealer today, you don’t need to do anything to change what we were doing before.
[Editor's note: Reinsurance programs enable dealers to contribute to the reserves used to pay claims. After all claims, fees and insurance are paid, dealers share in the money left over, called the underwriting profits, plus investment income. Reinsurance proceeds come with big tax benefits.]
Is it fair to say you’re phasing out the GM Protection Plan?
On the auto finance side we have really diversified our dealer relationships. On the insurance side, we really have not made that change. There’s a need for us to diversify our relationships. It was great to be a captive for GM, but that is also constraining, if you’re a Ford dealer or a Chrysler dealer.
We haven’t told our story very well, outside the GM space.
Are you adding the Ally Premier Protection brand to other F&I products besides extended service contracts?
Ally GAP [guaranteed asset protection] is also rebranding. We’re looking at [adding products]. Part of the reason we didn’t before now was that until we got approval to be a financial holding company we couldn’t -- or at least, it wasn’t clear we should.
[Editor’s note: The Federal Reserve in December 2013 gave Ally an upgrade from bank holding company to financial holding company status. Without it, Ally would have had to divest its insurance operations.]
Do you already offer F&I products to non-GM dealers, and if so, how?
We offer some products using the VehicleOne and Repair Advantage brand names. They are different products, operating on different systems. That’s another big difference with Ally Premier Protection. We will have one product, one system and one brand.
You can reach Jim Henry at firstname.lastname@example.org