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Improved Credit Ratings Leading to Reduced Stockpiles of Goods

Increasing Loan Originations at Ally and GM Financial Happen without Relaxing Lending Requirements

Improved Credit Ratings Leading to Reduced Stockpiles
Improved Credit Ratings Leading to Reduced Stockpiles

Improved Credit Ratings Leading to Reduced Stockpiles of Goods

In the ever-evolving world of auto lending, industry giants like GM Financial and Ally Financial are adapting to the challenges presented by a high-priced and competitive market. They are doing so by implementing data-driven loan approvals, tightened credit underwriting, and strategic incentive management.

According to Michael Rhodes, CEO of Ally Financial, commercial floorplan balances have been lower than expected through the first half of the year. This trend, Rhodes suggests, is contributing to healthier dealer fundamentals. Meanwhile, GM Financial, the leading provider of floorplan financing for U.S. GM dealers, reported a market share of 47.8% at the end of June, up from 46.9% a year ago. The company had 1,994 U.S. floorplan dealers as of June 2025, a 1.6% increase compared to a year ago.

However, GM Financial's commercial finance receivables total for dealers in North America decreased from $15.7 billion a year earlier to $15.3 billion as of June 2025. Similarly, Ally's outstanding floorplan loans at the end of the second quarter were $14.7 billion, down 21.4% compared to a year ago.

New-vehicle inventory for the U.S. fell below an estimated 2.5 million at the end of June 2025, down from 2.9 million a year earlier and approaching 3.3 million at the end of December 2024. This inventory shortage is a factor in the rise in average transaction prices, which now exceed $48,000.

To contend with these high prices, both lenders are extending loan terms beyond 72 months, but they remain cautious of income-to-price ratios to limit credit risk exposure. GM Financial, along with other automaker captive finance arms such as Ford Credit, leverage access to proprietary customer and vehicle data to price loans more precisely, bundle products (insurance, service contracts), and strengthen customer retention. Ally Financial, on the other hand, adjusts its lending tactics in response to macroeconomic factors and tariffs affecting vehicle prices.

In terms of loan approvals, these lenders employ advanced, AI-driven underwriting models to make rapid credit decisions and reduce manual costs, enhancing efficiency while maintaining stringent risk assessment. Credit approvals are calibrated using recent loan performance data, vintage rollovers, and micro-segment analysis – opening or closing credit lines at a detailed segment level rather than broad policy changes.

The industry is also witnessing a push toward digitization, integration of advanced technology, and customized financing solutions, especially for electric vehicles. Automaker captive finance entities are expanding their offerings with preferential rates targeted at luxury and electric vehicle buyers to capture loyalty and cross-selling opportunities.

In sum, GM Financial, Ally Financial, and their peers are increasingly relying on technology-enabled, nuanced underwriting and pricing strategies, along with careful incentive structures, to sustain growth while managing credit risk in this high-priced, competitive auto lending environment.

In the realm of diverse industries, both GM Financial and Ally Financial extend their reach beyond the auto lending sector, venturing into the finance and aerospace industries. Their business acumen in credit management and data-driven strategies are also evident in the aerospace sector, where they provide financing solutions.

The finance world has seen GM Financial and Ally Financial adapting their business models to accommodate high prices in varying industries, using data-driven underwriting and risk assessment, as well as technology-enabled pricing strategies to manage risk effectively.

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