Ally Financial Inc., formerly GMAC, the old finance arm for General Motors, is expanding training and consulting services to its dealer network through a growing network of field representatives.
The company also plans to sweeten its incentives on service contract penetration.
In a crowded field of vendors, Ally views its consulting and training and its rewards program as competitive advantages.
"We have grown the sales force about 30 percent this year," said Tom Callahan, president of Ally Insurance. "We started from virtually zero and we have 100 salespeople right now."
Callahan, 59, discussed Ally's dealer program enhancements with Donna Harris.
Q: How does the new consulting and training differ from what was previously offered?
A: GMAC's training typically involved bringing trainers to work with dealers to help them in a specific area. Here, we start off looking at the overall operation of the F&I space and develop recommendations for the dealer to help drive results. It's broader and it's a multiday process. Our people monitor and work with the dealer. They have a personal commitment to the dealers to help them drive the results.
What results are dealers seeing?
Profit per vehicle is up 30 percent from where they started. Some see a 5 to 10 percent increase; some see a 40 to 50 percent increase starting from low base. We track results on a monthly basis, dealer to dealer.
Is field staff compensation tied to results at the dealership level?
Part of their compensation is variable on the results that they drive. We think our people should be responsible for results.
How many dealers have gone through the consulting and training?
Several hundred dealers have signed up. I don't know how many have completed it.
What are the most common obstacles to increasing per-vehicle-retailed income?
The biggest obstacle is an inconsistent process, where not all products are offered to all the customers. How the products are presented might be different from customer to customer.
The pay plan also may encourage employees to sell one product over another and have unintended results. Or the finance manager may not be offering products to cash buyers.
Are pay plans a big issue?
Some pay plans are overweighted in one direction, and the dealership has unintended consequences. Dealers have to tweak the plan to encourage a good mix. They don't want to compensate only on the number of products, for example, and not focus on overall revenue generated because the finance manager ends up selling too many lower-priced, low-margin products. The plan should recognize the importance of service contracts because they bring business back to the dealership at a later date.
Do you recommend packaging products together to increase business?
We have internally looked at the process of putting our products in bundles. There are some compliance hurdles in terms of bundling. If you present products in a bundle you also have to offer and price them individually. There's a way you can put them together in terms of presenting them.
Do you have other products in development?
At this point, no. There are a limited number of products dealers are interested in. If there are other products we think will bring value, we will look at those products.
How is your non-GM business doing?
We are seeing a good growth trajectory in the non-GM space. Vehicle 1 and Repair Advantage [service contract programs] continue to grow. The rate of increase is substantial. We are starting from a low base.
What percent of the business is non-GM?
At this point we are predominantly selling GMPP [General Motors Protection Plan]. Service contracts other than the GMPP are probably approaching 20 percent of our business today. We are happy with the development we are seeing.
Doesn't the Ally Dealer Rewards program offer incentives on service plans?
Yes. We're looking for ways to make the rewards more effective across the whole organization. It's a competitive advantage that others do not offer.
How much can dealers make in incentives?
They can earn up to $95 per service contract, depending on the penetration they have and their status in the overall Dealer Rewards program. We are looking at additional enhancements that we will finalize over the next couple of months that will make the program stronger for us and the dealer as well.
Are you concerned about what will happen when GM Financial introduces a service plan?
AmeriCredit Corp. [which is the platform for GM's new captive] had a product in the marketplace that we have competed against for the last several years. There are many service contract providers we are competing with on a day-to-day basis.
If GM Financial brings another one to market it will be another competitor. But we think with our process and skills of our salespeople and our performance we have a very strong offer to dealers. We will compete with GM Financial or anyone else out there. If they make decisions to offer additional products they will quickly find the market is very crowded already.
How are dealers doing in terms of compliance?
I think dealers are very aware of compliance issues. We have seen problems where dealership personnel have taken shortcuts in the process. They were not making disclosures or forms were not filled out. On the whole, dealers are doing a good job making sure they are in compliance.