Ally Financial will no longer be providing consumer or commercial loans for the recreational vehicle business, the company announced in a press release.
The decision to exit RV finance is a strategic action that will allow it to concentrate more on its core business operations and better optimize capital allocation, Doug Timmerman, president of auto finance for Ally, said in the press release
Ally Financial’s most significant source of revenue comes from auto loans. The finance company is one of the top three lenders in the automobile space, having accumulated a $76.8 billion auto portfolio last year, according to the 2018 Big Wheels Data Report.
Comparatively, the RV portfolio is much smaller, coming in at $1.8 billion, Michael Del Grosso, vice president at Jefferies LLC, told Powersports Finance. Additionally, the portfolio was less than 1% of its “interest-earning outfits” and less than 3% of its auto receivables.
However, while that amount of money is a drop in the ocean for Ally, that’s still a large sum of money from an industry perspective.
“[Ally] was a pretty big-sized player,” Jud Chamblee, product manager of lending solutions at Texas Dow Employees Credit Union, told PSF. “Ally is a big floorplan source in the RV world because the dealerships get incentives for sending their business to Ally. The floorplan with Ally, a lot of business got sent to their side, and they do a lot of long-term financing.”
Ally Financial has a “very limited number” of accounts in which its finances motorcycles and off-road vehicles and those will “remain in place,” an Ally Financial spokeswoman told PSF.
Ally Financial also announced that it would be pulling back from transportation equipment finance, which includes airplanes.
“These actions allow us to put more energy and more resources into our core businesses and provide the greatest value to all of our stakeholders from dealers and consumers to shareholders and employees,” Timmerman said. “We have a long history in auto finance and it’s what we do best, so maximizing the resources we have in support of dealers is the right step.”
RV dealers in Ally’s network were notified of the decision earlier this month, and Ally is helping dealers to transition to “new finance providers as smoothly as possible so they can maintain continuity of their businesses,” Timmerman said.