General Motors recently began giving all of its U.S. Buick-GMC and Cadillac lease incentives to its captive finance arm GM Financial. The move removed the ability of other financial lenders — such as Ally and U.S. Bank — to use the incentives, and took Ally CEO Michael Carpenter by surprise.
“We were not surprised by the idea of GM growing their captive. We were surprised they would exclude any competition in the lease space,” Carpenter said. “We will compete with anybody on a head-to-head basis. What pisses us off is when we don’t get to compete on a heads-up basis.”
The change will likely put Ally at a disadvantage and make it less competitive when it comes to leases, but Carpenter said that the financial lender-turned-bank will be able to compensate for the change.
Even so, industry analysts and those close to the automotive lending arena are questioning the way in which GM went about pulling the incentives and not notifying Ally, essentially terminating a good relationship in a bad way. To note, The General didn’t give Ally, previously known as GMAC, an advanced notice of the lease incentive revision, thereby raising eyebrows about the way in which the automaker ends a portion of a long-standing relationship with a long-time partner. GMAC, or General Motors Acceptance Corporation, served as GM’s own captive finance arm thru 2006; it helped GM at a few critical times, especially after GM exited bankruptcy.
But what is perhaps the proverbial icing on the cake is that today, Ally continues to operate out of Tower 200 of GM’s global headquarters, the Renaissance Center in Detroit, Michigan. So all GM had to do is send Ally a memo to the tower next door informing it of the lease incentive changes. That would have been much better than to blindside a long-time business partner. Agreed?