Ally Bank 2014 Annual Report Download - page 50

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K
38
The following table presents the total U.S. consumer origination dollars and percentage mix by type.
Consumer automotive
financing originations
% Share of
Ally originations
Year ended December 31, ($ in millions)2014 2013 2012 2014 2013 2012
GM
New retail standard $ 7,280 $ 6,322 $ 6,230 18 17 16
New retail subvented 3,992 4,416 5,960 10 12 15
Lease 9,296 8,484 5,919 23 23 15
Used 5,279 4,991 5,174 13 13 13
Total GM vehicle originations 25,847 24,213 23,283 63 65 60
Chrysler
New retail standard 3,556 3,468 4,431 9912
New retail subvented —390 1,971 —15
Lease 1,489 1,936 2,380 456
Used 1,736 1,586 1,746 444
Total Chrysler vehicle originations 6,781 7,380 10,528 17 20 27
Non-GM/Chrysler
New retail vehicles 3,077 2,269 2,178 866
Lease 547 171 93 11—
Used 4,699 3,297 2,661 11 87
Total Non-GM/Chrysler vehicle originations 8,323 5,737 4,932 20 15 13
Total consumer automotive financing originations $ 40,951 $ 37,330 $ 38,743
During the year ended December 31, 2014, total consumer originations increased $3.6 billion compared to 2013. The increase was
primarily due to continued growth in the Non-GM/Chrysler channel, as well as strong GM new retail standard and lease volume. Non-GM/
Chrysler volume increased 45% in 2014, compared to 2013, due to the continued strategic focus beyond the GM new and Chrysler new
markets. The increase in volume was partially offset by lower GM new retail subvented and Chrysler new retail and lease volume. Chrysler
new retail and lease volume decreased primarily as a result of lower retail penetration after the expiration of our operating agreement on April
30, 2013.
Manufacturer Marketing Incentives
Automotive manufacturers may elect to sponsor incentive programs (on both retail contracts and leases) by supporting finance rates
below the standard market rates at which we purchase retail contracts. These marketing incentives are also referred to as rate support or
subvention. When automotive manufacturers utilize these marketing incentives, we are compensated at contract inception for the present
value of the difference between the customer rate and our standard rates. For retail loans, we defer and recognize this amount as a yield
adjustment over the life of the contract. For lease contracts, this payment reduces our cost basis in the underlying lease asset.
Under what we refer to as pull-ahead programs, consumers may be encouraged by the manufacturer to terminate leases early in
conjunction with the acquisition of a new vehicle. As part of these programs, we waive all or a portion of the customer's remaining payment
obligation. Under most programs, the automotive manufacturer compensates us for a portion of the foregone revenue from the waived
payments that are offset partially to the extent that our remarketing sales proceeds are higher than otherwise would be realized if the vehicle
had been remarketed at lease contract maturity.
We were previously party to separate agreements with both GM and Chrysler that provided for certain exclusivity privileges related to
subvention programs that they offered. Our agreement with Chrysler expired in April 2013. In addition, our agreement with GM expired
effective February 28, 2014. These agreements provided Ally with certain preferred provider benefits, including limiting the use of other
financing providers by GM and Chrysler for their incentive programs. We entered into a new automotive financing agreement with GM that
became effective on March 1, 2014, which provides a general framework for dealer and consumer financing related to GM vehicles, as well
as with respect to our ongoing participation in GM subvention programs. The GM Agreement does not provide Ally with any exclusivity or
similar privileges related to the financing of GM vehicles, whether through subvention programs or otherwise. As a result, the GM Agreement
does not provide the economic benefits or impose the obligations that were included within our prior agreement with GM. GM informed its
dealers in early January 2015 that it intends to provide lease subvention programs for Buick, GMC, and Cadillac products exclusively through
its wholly-owned subsidiary, GMF. Further, GM informed us on February 27, 2015 that they also intend to provide lease subvention programs
for Chevrolet exclusively through GMF. Our share of GM consumer sales was 28%, 29%, and 30% for the years ended December 31, 2014,
2013 and 2012, respectively.