Ally Financial Inc.’s new chief executive, Jeffrey J. Brown, is focused on “customers and competitive strength,” he said during his first call with analysts this morning. Relationships with dealers are also a focus.
Brown assumed his new role Monday.
Part of the competition, Brown acknowledged, comes from General Motors Financial Inc. He added that Ally has not been informed of any further loss of business beyond leasing, but he has begun to think about what would happen if GM takes more business away.
Brown was referring to the announcement in mid-January that GM Financial will be the exclusive provider of subvented leases for Buick and GMC dealers, an agreement that went into effect this week. Previously Ally handled most of those leases.
Brown said that Ally’s relationship with GM remains strong, and even GMF made it clear on its earnings call this week that it was not out to supplant all of GM’s existing relationships. Ally, Brown believes, remains at the top of that list.
“I don’t want to keep talking about history,” Brown said. “I want to deliver a more nimble, energetic, and opportunistic Ally.”
Leasing is a profitable business, Brown said, but also a volatile one, and the loss of GM leases will free up capital for other areas. When asked if there was opportunity to make up ground in the used car market, Brown said that if that was what made sense for the company, then he would have no objection.
Used pricing has continued to soften, he said, but he believes it is more of a “supply dynamic” than anything else, and predicts used pricing will drop about another 5% in 2015. Still, Brown said, delinquencies may be higher with used, but the severity for losses remains low.
Dealership relations is one of Ally’s key areas of focus in 2015, with the company’s sales force “battling out there day and night,” Brown said. Ally will continue to work on growing its dealer base, currently 16,000 strong.
“We are the 800-pound gorilla,” Brown said. “And I still expect us to continue to be.”
Brown’s appointment was announced on Monday, and had been in the works for “well over a year,” according to Ally. The company said that after 2014’s final earnings were released, it seemed like an appropriate time to announce the rertirement of former CEO Michael Carpenter.
“Mike signed on to right the ship,” Chairman Fritz Hobbs said on the call. “[He] did that, and then some.”