Best known for underwriting public radio programming such as “All Things Considered” and “Marketplace,” Ally Financial — formerly known as GMAC until the subprime market collapse kicked off the Great Recession — has decided to go for the gold in the used car and leasing markets, citing “irrational” pricing found in the superprime mortgage loan sector for its move from the latter toward the former.
The other reason? Better returns on investment; according to Ally CFO Chris Halmy, leasing a vehicle takes more expertise than conducting a low-risk, low-return superprime loan. Thus, Ally can gain more from financing a lease or used car purchase while still remaining inside a low-risk bubble.
As for its current lease and used car financing operations, 29 percent of Ally’s total originations came from leases while 27 percent came from the used car lot in the third quarter of 2013, up 2 and 3 percent respectively from the same time last year. Total originations for the third quarter netted the organiztion $9.6 billion, unchanged from Q3 2012.
Regarding future plans, Ally is planning to buyout the United State Treasury, which currently holds 74 percent of Ally. There are also plans for an IPO, but when is still a matter to be discussed behind closed doors.