Now that GMAC Insurance has shed its consumer auto insurance business in the United States, the company is concentrating on wholesale insurance for dealers and retail F&I products sold through dealers, says President Tom Callahan. GMAC Insurance has more opportunities to do that because parent company Ally Financial Inc., the former GMAC Financial Services, has been the preferred lender for Chrysler dealers in addition to GM retailers since April 2009.
GMAC Insurance chief: We're focusing on products we can offer dealers
Callahan, 58, was promoted last month from executive vice president of GMAC Insurance, in charge of the company's Dealer Product & Services Group. He said GMAC Insurance has picked up share on the wholesale side, insuring inventory for Chrysler dealers who floorplan with Ally. For F&I products such as extended-service contracts, the vast majority of the U.S. business for GMAC Insurance still comes from its traditional GM dealers.
Callahan's new title also gives him responsibility for international markets. That used to be a separate job. Callahan said that for international growth, the huge China market is on the front burner. Special Correspondent Jim Henry interviewed Callahan on Sept. 7.
We sold our U.S. personal-lines business (to American Capital Acquisition Corp.) at the end of February this year. Our focus now is on those products we can offer to or through dealers -- products that are auto-related or auto-finance related. We think we can become the leading provider in the marketplace by concentrating on those priorities.
So you still offer consumer auto insurance in other markets?
We have personal lines in other markets. Like anything else, we're looking at those operations to see how they fit in our core strategy going forward.
How much of your business is non-GM?
It's the GM space where we historically have been the No. 1 player with insurance products. We do offer GAP and lease wear-and-tear coverage with Chrysler where we are the underwriter. We also do wholesale insurance for Chrysler dealers. Those who do wholesale (floorplan) through Ally can also take advantage of wholesale insurance.
Are your non-GM products marketed as “GMAC,” or do you have other brands?
We do not underwrite the Chrysler service contracts. We do offer service contracts, but they are in competition with the Chrysler service contract that is in the marketplace. We can offer Chrysler or Toyota or Ford dealers service contracts, or write GAP products. We have two distribution channels, one that's direct to dealers where we have dedicated sales employees, and we also purchased a company called Universal Warranty years ago. That goes through the independent agent channel.
What's your mix of non-GM business in the U.S.?
Depending on the product, our wholesale business is about 30 to 40 percent non-GM business -- that is, not financed with GMAC. For service contracts, F&I products, probably closer to 85 percent of our business is GM-based.
Why has GMAC Insurance kept the name, when the rest of GMAC has become “Ally”?
It's something that will happen in the near future. It's primarily just a sequencing issue. There were some other internal things we needed to take care of first. Some other things were a higher priority than a branding exercise. You can't do everything all at one time.
What's your business like overseas?
Our largest market is obviously the U.S. and Canada, but we have a pretty good footprint in Europe. And we are starting to build a footprint in China, which is very exciting. The opportunities are enormous. We're trying to figure out how to bring our products to China. It's an immature market, especially compared to most of the rest of our markets.
I've heard that it is really starting from scratch, like trying to come up with credit scores for people.
We have to go back to some of the basics of how to sell and to market the products. There are a lot of areas where the whole automotive transaction, from sales to financing to insurance products, it's really new territory. Matching up the needs of the business with what you can do in that specific market, you have to find out what information is available and tailor that to the risk profile. It's a learning experience. It is for everybody there.
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