Ally Financial Inc. has decided to apply the “Ally” name to most of its consumer and dealer-related auto finance operations in North America -- all but ending the GMAC brand name on the continent after a 91-year history of auto lending.
The shift from GMAC to Ally will take place in August, the company said today. The corporation changed its name to Ally Financial Inc. in May.
GMAC, traditionally short for General Motors Acceptance Corp., has been diversifying itself away from GM ever since it was spun off from the automaker in 2006.
The Ally brand will be used to support the following manufacturers: GM, Chrysler Group, Saab, Thor Industries and Fiat Mexico. Ally's auto financing operations outside North America will continue to operate under the GMAC brand while the company evaluates using the new brand in other regions.
The name change does not apply to the Suzuki dealer network. Ally is the preferred lender for Suzuki.
When GMAC announced it would adopt the Ally name at the corporate level and possibly its dealer and retail operations, it considered continuing the use of GMAC for the products it supplies to GM dealers.
Ally President Bill Muir said that despite the name change, the company's primary focus remains auto financial services.
“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 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.”
Ally -- one of the world's largest automotive financial services companies -- extended more than $16 billion in credit to retail customers in the first half of 2010 in the United States, Canada and Mexico. That's up more than 120 percent from the first half of 2009. Also during the first six months this year, the company extended an average of about $2 billion of credit per month to U.S. consumers.
Since its emergence from bankruptcy last year, GM has strived to broaden its financing and lending options for customers to help drive sales.
The automaker considered replacing Ally with its own finance company. GM can't purchase Ally Financial because it can't legally own a bank. Ally Financial needs to keep its bank holding company status to be eligible for federal aid and to raise money through deposits.
But GM's “junk” credit rating hampered its ability to raise low-cost capital to finance and operate another acquisition. The U.S. government owns 61 percent of GM and 56 percent of Ally Financial - formerly GMAC.
Working with other banks
Instead of creating its own finance arm, GM is looking to broaden its lending ability by talking with other banks -- including JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co.
The banks would write loans and leases on cars, said four people with knowledge of the situation who asked to remain unidentified because the discussions are private.
GM also has an agreement with AmeriCredit Corp. to supply auto loans to subprime customers, or those with risky credit.
GM's chief competitors, including Ford Motor Co., control their own finance arms. Such captive lenders help the holding company's sales by assuming additional risk and paying to reduce interest rates on subprime borrowers' loans and move them into near-prime loans.
Last month, GM CFO Chris Liddell said the company would consider a variety of sources for consumer car loans rather than carry the assets and liabilities of a lending business on its books.
"As we enter an exciting new chapter in GM's history, Ally remains an important partner and auto financing provider for GM customers,” Liddell said today. “We look forward to continuing that relationship."
Bloomberg News contributed to this report