GM Financial is rising strongly. Meanwhile, Ally Financial is still standing despite its shattered ties to General Motors.
GM President Dan Ammann said he expects GM Financial’s profit to more than double in the next three years, soaring to as high as $2 billion annually. Last week, Ammann called the captive arm’s rebuild “an absolute home run.”
GM Financial’s growth and path to near exclusivity with GM dealers is impressive, and logical. It allows for things like better management of the buying cycle of customers, Ammann said. For example, he said, GM Financial can get customers into another lease before the current lease is up.
But the renewed strength of Ally Financial is equally impressive. The company lost the bulk of its business when GM began to sever ties with it, and Ally unloaded a hefty $98 million payment when it settled with the Consumer Financial Protection Bureau in 2013 for potentially discriminatory auto lending, a practice Ally denies.
Ally’s net profits slumped 44 percent during the second quarter, but the company is still alive. Ally’s auto loan and lease originations declined just 1 percent from a year earlier to $10.8 billion, despite a 96 percent drop in lease originations for GM vehicles. Ally added more than 900 dealers to its lending portfolio during the first seven months of the year.
The companies had a different set of tasks, with one trying to stay afloat and the other trying to start from scratch. But amid those business challenges and revamped strategies, both are finding their way.