Autoblog

US Treasury denies pay hikes for GM, Ally execs

Jonathon Ramsey — Mon, 29 Apr 2013 11:30:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

In December, the US Treasury granted General Motors the rights for the company to once again buy corporate jets and for its executives to fly on them, but neither those execs nor the ones at Ally Financial will get any raises this year. The automaker, worried that top talent might leave for higher-paying pastures, reportedly sought a more "market-based approach to executive compensation" for 12 of its top 25 execs. Because the federal government still has stakes in both GM and Ally, though, the companies need approval for pay raises, and they were declined. Neither company sought raises for their CEOs, and Ally's request didn't involve any additional cash compensation for the executives in question.

While the Treasury says that cash salaries for the 25 top executives at GM and Ally combined are just four percent below the median compared to similar positions, total cash compensation is 56 percent below the median. That would include GM CEO Dan Akerson (shown), who got a little more cash last year because of a compensation rearrangement speculated to potentially involve his retirement, but the overall annual pay package of $9 million hasn't changed for him since 2010 according to the Treasury.

What's more, it's said the overall compensation at both firms dropped by double-digit percentages compared to last year due to an influx of new appointments among the top 25 executives. The Treasury has said it will divest itself of all GM shares it owns by March 2014, but hasn't given a any guidance on divestiture of its Ally stock, the financial firm dealing with a much more complicated situation.

US Treasury denies pay hikes for GM, Ally execs originally appeared on Autoblog on Mon, 29 Apr 2013 11:30:00 EST. Please see our terms for use of feeds.

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General Motors buys Ally Financial foreign operations

Dan Roth — Sat, 24 Nov 2012 17:01:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

In a move that welcomes former pieces of General Motors back into the fold, GM Financial has reached a deal with Ally Financial, formerly GMAC, to buy a piece of the company's international operations. The $4.2 billion deal is for Ally's Latin America, Europe and China operations.

"GM is entering the most aggressive rollout of new vehicles in its history, and this acquisition will make us an even more formidable competitor by ensuring that competitive financing is available to our customers and dealers around the world," says General Motors CFO Dan Ammann. The ability to finance from a captive unit will let General Motors extend better loan terms to potential customers, which the automaker sees as key to closing a sales gap that's between 10 and 15 percent versus automakers who already have their own financing divisions.

GM will be handing over more than $2 billion in cash to GM Financial, and the unit will more than double its liabilities from $12 billion to $27 billion while also doubling its assets to about $33 billion. GM Financial expects to bolster its yearly pre-tax earnings by $300-$400 million. It will take at least six months to wrap this deal up, provided it gets approvals from various oversight agencies. For more information on the deal, check out the official press release below.

Continue reading General Motors buys Ally Financial foreign operations

General Motors buys Ally Financial foreign operations originally appeared on Autoblog on Sat, 24 Nov 2012 17:01:00 EST. Please see our terms for use of feeds.

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Watchdog says White House needs exit strategy for GM, Ally

Jonathon Ramsey — Thu, 12 Jul 2012 11:30:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Christy Romero, a special inspector general examining the corporate bailouts that came in the wake of 2008's financial crisis, has some advice for the U.S. government: "Treasury should develop a concrete exit plan for GM and Ally." She is referring, of course, to the 30-percent stake that the government still holds in General Motors and the 74-percent stake it holds in Ally Financial, formerly known as GMAC when the Treasury pumped $17 billion into it.

For its part, the government says it already has an exit plan and Romero doesn't offer any further advice to guide that plan in some other direction. With the calls for Treasury to divest coming even more frequently during the U.S. Presidential race, Treasury has repeatedly stated the same thing: it is waiting for the right time to maximize its return, thereby minimizing the loss to the U.S. taxpayer.

With 500 million GM shares in its portfolio, the government needs those shares at $52-per in order to recoup the remainder of its initial $50 billion investment. Shares are right around $20, which would mean a highly unpalatable Greek haircut if the government gave up its position. Recent GM moves have also led the Treasury to believe that there is unlocked value in the company that the market simply hasn't reacted to yet; however, that sentiment was voiced two months ago and the stock price still hasn't budged.

Ally Financial is a different conundrum, one that the Treasury seems to be much more eager to divest itself of. The financial firm has paid back $5.4 billion of its TARP loan and filed IPO paperwork a year ago, but there's still not even a potential date for an offering, and no one seems to have any idea when it will pay off the rest of the funds. While plans are debated for an offering or a breakup of the company, Treasury has suggested that GM buy back Ally, but GM hasn't indicated any desire to do so.

So in effect, nothing has really changed, but at least now we have more figures in the government suggesting that the government get out of GM.

Watchdog says White House needs exit strategy for GM, Ally originally appeared on Autoblog on Thu, 12 Jul 2012 11:30:00 EST. Please see our terms for use of feeds.

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Treasury suggests GM buy back troubled Ally Financial

Jonathon Ramsey — Wed, 28 Mar 2012 10:30:00 EST

Filed under: Government/Legal, Earnings/Financials

Back when Ally Financial was known as GMAC Financial, the U.S. Treasury gave it $17.2 billion in TARP funds to weather the global economic crisis. GMAC is now Ally Financial, and although it has repaid $5.4 billion of what it was loaned, there doesn't seem to be a clear path for repaying the outstanding amount. Bloomberg reports that Ally's mortgage unit, Residential Captial (ResCap), is teetering on the ledge of bankrupcty, and its banking operations didn't perform well in the Federal Reserve's stress tests that assess a bank's health.

An IPO for the entire company faces dim prospects (one was rumored back in April of 2011), so in a private equity ploy, the Treasury would like Ally to divvy itself up and sell the pieces to unlock value. Estimates are that the pieces could fetch $23.1 to $28.6 billion. The plan is supported by Elliott Management Corp, a shareholder that holds 2.3 percent of Ally stock. However, Ally's CEO and its board don't want to break the company up, and the Treasury - which holds 74 percent - doesn't want to lean on the leadership too hard for fear of "appearing as a heavy-handed owner."

In addition, the looming bankruptcy of ResCap will have an unknown effect on Ally's ability to do anything. Before the mortgage implosion, GMAC's auto unit was struggling and ResCap was restructured as a separate entity so that it wouldn't be dragged down by the captive finance department. The situation is reversed now, with ResCap in trouble and the captive finance arm supporting itself, but Elliot feels that the restructuring won't be enough to shield Ally from perhaps 18 months of litigation and billions in claims.

Ally execs feel differently, but no one will know until the trigger is pulled and the courts weigh in. With the Treasury reluctant to compel a move, it could be some time before it sees its $11.8 billion again.

Treasury suggests GM buy back troubled Ally Financial originally appeared on Autoblog on Wed, 28 Mar 2012 10:30:00 EST. Please see our terms for use of feeds.

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Report: Ally Financial files IPO paperwork

Chris Shunk — Fri, 01 Apr 2011 09:21:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

Ally Financial, formerly GMAC Financial, has filed the paperwork necessary for an Initial Public Offering. The Detroit News reports that the filing will go to the Securities and Exchange Commission for approval before Ally can go public; a process that could take months. The federal government, which owns 74 percent of the lending arm due to its $17.2 billion 2009 bailout, is the only party listed as a stockholder.

The next step for Ally Financial is to go on a tour to entice investors to buy into the financial firm in advance of the SEC's decision. Ally isn't yet close to announcing a price for the stock, nor has the government disclosed the amount of shares it plans to unload, but the DetNews reports that the fed plans to net $5.5 billion from the transaction. The government also owns $5.9 billion in convertible preferred stock.

General Motors still owns 9.9 percent of Ally Financial, but the automaker reportedly won't participate in the sale. The General did announce previously that it sold its preferred stock, though, for $1 billion.

[Source: The Detroit News]

Report: Ally Financial files IPO paperwork originally appeared on Autoblog on Fri, 01 Apr 2011 09:21:00 EST. Please see our terms for use of feeds.

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Despite agreement with AmeriCredit, GM said to keep deal with Ally

Zach Bowman — Sun, 25 Jul 2010 12:32:00 EST

Filed under: GM, Earnings/Financials

General Motors may be in the process of acquiring AmeriCredit as a step toward securing a captive in-house financing operation, but the company says it will continue to nurture its relationship with Ally. As you may recall, Ally (formerly GMAC) has financed dealer floor plans for years, and GM says that it will continue to rely on its former financing arm for that very reason. While AmeriCredit has been able to weather the rise and fall of consumer confidence with nary a scratch, the company doesn't boast same level of assets as other lenders. Note also that AmeriCredit has next to no experience financing dealer floor plans, and it's easy to see the holes in GM's financing strategy.

Ally seems happy to fill in those bald spots. According to Automotive News, the company provided financing for around a third of all GM vehicles sold at retail during in the first quarter of 2010 and 90 percent of The General's vehicles in inventory. That leaves AmeriCredit to take care of subprime borrowers and leasing duties. Consider the two the dynamic duo of GM financing.

[Source: Automotive News]

Despite agreement with AmeriCredit, GM said to keep deal with Ally originally appeared on Autoblog on Sun, 25 Jul 2010 12:32:00 EST. Please see our terms for use of feeds.

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Chrysler Financial to begin lending once again for Chrysler vehicles?

Zach Bowman — Wed, 21 Jul 2010 17:20:00 EST

Filed under: Car Buying, Chrysler, Earnings/Financials

Chrysler Financial hasn't been doing a whole lot since the domestic automotive implosion of aught-nine. When the Obama Administration's Automotive Task Force found that the lender didn't have the wherewithal to continue making large loans to dealers, GMAC was forced to take over lending duties for Chrysler. Part of that decision was due to the fact that last year, used car values were at one of their lowest points in decades. Since the majority of Chrysler Financial collateral involves used cars and trucks, that was a bit of an issue at the time.

But that was then and this is now. Used vehicle values have rebounded in a big way, and as such, word has it that Chrysler Financial is once again looking into making large-scale loans to dealerships across the country. Word has it that Tom Gilman, Chrysler Fianancial's chief executive officer, has been contacting numerous dealerships in order to get a feel for whether or not there's enough interest for the institution to return to lending, according to Automotive News. Even so, with most dealers now cozy with GMAC, it may be difficult for Chrysler Financial to reestablish itself as the titan it once was.

[Source: Automotive News - sub. req'd.]

Chrysler Financial to begin lending once again for Chrysler vehicles? originally appeared on Autoblog on Wed, 21 Jul 2010 17:20:00 EST. Please see our terms for use of feeds.

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GMAC changing name to Ally in North America

Jonathon Ramsey — Thu, 15 Jul 2010 10:27:00 EST

Filed under: Marketing/Advertising, Earnings/Financials

Come August 23, GMAC's auto lending business will be brought under the Ally Financial banner. While GMAC had already rebranded its other financial divisions, the auto business still went by GMAC. The move continues GMAC's distancing itself from its General Motors mothership, and if we read more into it, this could make it even clearer that Ally has no interest in returning to majority ownership by the automaker (GM still maintains a small stake in the company post-bankruptcy).

In its announcement, GMAC said it would continue to finance GM, Chrysler, Saab and Thor Industries buses and RVs, and that the name change would allow "the company to invest in a brand it owns while continuing to grow" the business of "serving dealers and their customers." As long as those customers aren't subprime, at least.

[Source: GMAC]

GMAC changing name to Ally in North America originally appeared on Autoblog on Thu, 15 Jul 2010 10:27:00 EST. Please see our terms for use of feeds.

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GM seeking more subprime buyers?

Chris Shunk — Tue, 18 May 2010 11:01:00 EST

Filed under: Car Buying, Chrysler, GM, Earnings/Financials

In a word, yes. The Detroit News reports that General Motors is looking to find a way to tap into the subprime lending market that accounts for 16 percent of the overall car-buying market. There is, after all, plenty of pressure to sell more vehicles to enhance the company's value leading up to its initial stock sale. But while GM would like to strategically go after subprime borrowers, there is one significant roadblock in the way; Ally Financial. The financing firm, which was GMAC until The General sold off its captive finance arm prior to bankruptcy, apparently isn't willing to endeavor into risky loans. Ally, like The General, is owned in part by the federal government, with government cash in its coffers.

Top GM North America executive Mark Reuss reportedly told the Motor City newspaper that the automaker wants to have more autonomy over whom it lends money to, and it's all about moving more metal. Reuss points out the fact that 20 percent of Honda's new car sales are currently to subprime borrowers, adding "it would sure help my sales, the company's sales in North America, if we were able to get access."

If GM were to wrestle back a controlling interest in Ally, the company that could be most concerned with the result could be Chrysler. The Pentastar also depends upon Ally for vehicle financing, and CEO Sergio Marchionne points out that "if they control the lending practices and the degree of penetration and support that they gave to Chrysler, that would make us very, very concerned."

At this point, Reuss claims that GM hasn't yet asked Ally to expand subprime loans, so there is a chance that the two companies will be able to reach an agreement without GM getting back into the loan business.

[Source: The Detroit News | Image: Mark Ralston/AFP/Getty]

GM seeking more subprime buyers? originally appeared on Autoblog on Tue, 18 May 2010 11:01:00 EST. Please see our terms for use of feeds.

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Report: GM considering getting back into auto-lending game

Jonathon Ramsey — Fri, 14 May 2010 08:01:00 EST

Filed under: Government/Legal, GM, Earnings/Financials

If General Motors CEO Ed Whitacre has a personal soundtrack, perhaps it's anything by the group Attack! Attack! While the world waits for news of GM's first real profits, the company head is staking out a potentially huge acquisition, that being the auto financing arm of Ally Bank, which was once GMAC.

Ever since GM had to walk away from GMAC, dealers have had to rely on outside lenders in order to sell cars. One dealer said, "Getting a customer financed today is the hardest thing, even if they have good numbers," but a GM-owned finance arm could be more proactive with lending, and therefore moving metal and making money.

The report indicates that if Whitacre were looking to acquire Ally, he might only want to deal with the auto finance arm, leaving the other lending branches alone. Still, he'd have to sort out Ally's status as a bank holding company, and that might be too much to swallow. He could also form a partnership with other banks in the meantime, but it will take time to get banks on GM's side in the way GM wants, and Whitacre isn't a man out to waste time; he wants a deal in place by the end of the year before taking the company public.

[Source: Automotive News - Sub. Req'd | Image: William Thomas Cain/Getty Images]

Report: GM considering getting back into auto-lending game originally appeared on Autoblog on Fri, 14 May 2010 08:01:00 EST. Please see our terms for use of feeds.

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Care to dance? - Geely looking for partners

Dan Roth — Fri, 26 Oct 2007 16:02:00 EST

Filed under: China, Plants/Manufacturing, Tokyo Motor Show

"We started off building and selling cheap cars, but now we are changing," says Geely Automobile Holdings Chairman Li Shufu at at Tokyo press conference. Geely is the purveyor of some of the most inexpensive cars in China, and now it's looking to sell in other markets. Citing Geely's great respect for Japanese manufacturers, Li expressed a desire to collaborate with them as Geely follows the trail they blazed over a generation ago. Competition in the Chinese auto market is cutthroat, and Geely has plans to double its capacity and add assembly plants in North America and Europe, too. Their goal is to sell 1 million cars per year by 2010, quite an increase from the 175,635 units they moved last year.

[Source: Auto News - sub. req'd]

Care to dance? - Geely looking for partners originally appeared on Autoblog on Fri, 26 Oct 2007 16:02:00 EST. Please see our terms for use of feeds.

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