As tough as competition is in prime-risk loans and leases, Ally Financial Inc. is feeling the toughest competition in floorplan loans to dealers, CFO Chris Halmy said.
“I wouldn’t say the competition from our perspective has picked up in any meaningful way on the origination front,” he said in a conference call last week.
“If anything, where we see the biggest competition and compression in yields is really on the commercial dealer floorplan balances, and that’s where we see really the heavy competition I would say over the last few quarters,” he said.
Ally reported its floorplan penetration was off slightly for General Motors dealers, and remained flat for Fiat Chrysler Automobiles dealers. Ally said its GM penetration was 63.2%, down from 64.7% a year ago. Chrysler penetration was 44.3%, vs. 44.8% a year ago.
Meanwhile, Ally is sticking to its goal for the full year of originations in the “high-$30 billion range” in loans and leases, Halmy said. That target is lower than the $41 billion Ally originated in 2014, when the bank was getting more subvention business from General Motors.
“It continues to be a very competitive environment, whether it’s in the super-prime, where a lot of the big banks play, or right down to the subprime, where there’s obviously a lot of finance companies out there driving competition in the subprime space,” Halmy said during the company’s second-quarter earnings call, on July 28.
Ally originated $10.8 billion of loans and leases last quarter, up from $9.8 billion in the first quarter, but down from $10.9 billion in the year-prior period. Leasing accounted for 9% of originations, down from 29% in the year-prior period.
The decrease was mostly due to the transition away from subvented GM loans and leases. For the first time in Ally’s history, GM loans and leases comprised less than half of the bank’s originations, Halmy said.
