Ally Financial Will Do Away with GMAC Brand

Ally Financial Incorporated announced that it will rebrand its GMAC dealer- and retail-car financing operations in North America as “Ally,” as the company attempts to make itself a distinct entity with a broader car-financing business.

The corporation changed the name of the GMAC corporate entity to Ally Financial Inc. in May. Last year, it renamed its bank “Ally Bank.”

Ally supplies financing for Chrysler Group and General Motors dealers and their customers.

At the end of 2008, the car lender changed into a bank-holding corporation in an attempt to survive the harrowing credit crisis. GMAC has taken $16.3 million of bailout money from the United States government, which owns a majority stake in Ally.

“We are evaluating use of the [Ally] brand in other parts of our business,” explained Gina Proia, a spokesperson for Ally.

Bad Blood between GM and Ally

The most recent rebranding decision arrives at a time when the relationship between Ally and General Motors, its former parent company, is beginning to sour.

GM is negotiating with several financial institutions to expand the availability of its car loans, according to a Wall Street Journal report last month. The decision could cut into Ally’s portion of auto loans to the automaker’s retail customers. The automaker has struggled to offer loans to more customers, especially those with credit challenges, and it sees this as an obstacle to earning back its share of the U.S. market.

“Ally remains an important partner and auto financing provider for GM customers. We look forward to continuing that relationship,” stated Chris Liddell, the finance chief for GM, in a statement issued on Tuesday.

Begun in 1919, GMAC was originally created to offer auto financing to GM customers, and its name at first stood for General Motors Acceptance Corporation. GM sold a 51-percent stake of GMAC to Cerberus Capital Management LP in 2006 for $14 billion.

The sale was designed to divorce GMAC, a consistent profit source, from the plummeting credit ratings of the carmaker. After the Cerberus transaction, GMAC stopped using the long form of its name and became known as GMAC LLC.

GM hopes to continue doing business with Ally, but the carmaker will explore other lenders to fill the voids where it seems the lender has not been as eager to issue auto loans, such as in subprime leasing and lending. GM even considered attempting to regain control of Ally’s car-lending business, but Ally rejected the proposal.