Jo Tacon talks to Dennis Foley, joint MD of GMAC, about how
deepening and developing dealer relations is proving successful for
the former GM captive
The joint managing director of motor lender GMAC with
responsibility for sales and marketing, Dennis Foley is optimistic
about the outlook for the business – even in the wake of the
current market turmoil. Having worked for the former General
Motors-owned captive, which was majority-acquired by Cerberus
Capital Management in late 2006, for 22 years, Foley takes a
long-term view of the business, and believes that continuing
success will come largely through investment in people and
processes.
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The processes side of the business – in other words, the
back-office side, including credit risk – is taken care of by
Foley’s fellow MD, Ed Paulat, while Foley focuses on the sales and
General Motors side – especially development of dealership
personnel, and the performance of the field team. This somewhat
unusual dual arrangement was decided on by European regional VP
Carlos Ribeiro, Foley reports, which “shows how importantly dealer
relations are taken at group level,” he adds.
“One of GMAC’s main strengths is the depth of our relationship
with the network of General Motors dealers,” he says. “We can’t be
successful on our own – we have to work very closely together.” One
way in which GMAC is supporting its dealer partners is through
investment in training and skills, with regular workshops held
across the UK to talk dealer staff through the tricky regulations
surrounding finance and insurance (F&I) sales, and through
encouraging GMAC’s own account managers to gain Specialist
Automotive Finance (SAF) qualifications from the Finance &
Leasing Association (FLA). This emphasis on personnel development
has had the welcome side-effect of “completely stemming” staff
turnover, Foley observes.
“SAF really fits in with what we’re trying to do in the dealership
in terms of marketing and availability of promotional material, and
we were enthusiastic supporters of the scheme right from the
start,” Foley says. “We want our account managers to work with
dealers to help them grow their businesses; the idea is to make
them into business consultants rather than just someone who turns
up once a month to collect documentation. That way, both parties
benefit.”
The finance house has drawn up a business plan for F&I sales
for every one of the dealerships it works with, Foley says, in
order to “make dealers more effective, and to lessen the burden on
them”. He notes that the business plan idea was originally
suggested by a dealer, and has been well-received by other
retailers.
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By GlobalDataGlobal turmoil, local picture
Foley is upbeat about the overall outlook for GMAC. Although its
UK mortgage lending division exited the market in April of this
year, and the credit crunch has made the cost of funds rise sharply
for the finance house, Foley points out that these are issues which
are being dealt with on a group level. The UK GMAC team is
concentrating its efforts on the things which it can influence,
such as arrears levels and delinquency, which, Foley reports, are
“tightly controlled”. He adds: “We had an incredibly strong first
quarter, driven by Vauxhall’s success. As a brand, Vauxhall is
outperforming the market, and the forthcoming launch of the [Vectra
replacement] Insignia will boost sales volumes – and consequently
F&I sales – even further.”
It is impossible to deny that “consumer confidence has
taken a big hit”, Foley admits, and that GMAC is seeing the impact
filter through, especially in the increased cost of funds after a
recent credit ratings agency downgrade, which has hit net profit
margins hard. But, he insists, the funder has not changed the terms
of its loans to consumers, with rates, terms and deposits the same
as they were before the crisis hit. “In fact, there are still zero
per cent finance deals available across the entire model range,”
Foley says. Incentives are “increasingly important” to consumers,
he observes, but GMAC has “a strong history” of supporting sales of
General Motors cars with “attractive” finance deals.
In common with other point-of-sale finance providers, GMAC
has “seen the benefit of the withdrawal of direct lenders,” Foley
comments. Two major threats to point-of-sale in recent years have
been the aforementioned direct lenders, such as supermarkets, which
have offered car loans to consumers, and the trend amongst car
buyers to finance a new purchase by adding the sum to their
mortgage – a superficially sound decision when homelending rates
were cheap, and house prices kept on rising, but something which
seems less than sensible amidst the current property market
meltdown.
The PPI storm
Foley is guardedly optimistic about the outlook for GMAC in all
avenues, with one exception: sales of payment protection insurance
(PPI), which have “collapsed”, he says, as a consequence of
negative publicity in the wake of the Competition Commission
enquiry, and the attendant acres of bad publicity – along with the
threat of a fine or reprimand from the Financial Services
Authority. “The overall decline in insurance sales is as bad as it
can get without stopping completely, from penetration at an
historic high of over 20 per cent around three years ago to around
5 per cent now,” he reports.
The recent Competition Commission interim report on PPI
recommended offering customers a range of products at the
point-of-sale, something which Foley is dubious could work in
practice. “Dealers shy away from offering multiple products, as
they find it extremely difficult to manage and control the sales
process,” he opines. “The problem is that by not offering car
buyers PPI, in the current economic climate, we are potentially
doing them a disservice, as this is exactly the kind of protection
that is needed when times get tough.”
Still, that one cloud aside, Foley reiterates that he is
“optimistic and positive – but not smug!” about the future at GMAC:
“I have faith in the ability we have within the company, and am
sure we will continue to perform strongly,” he concludes.
Motor Finance Issue: 45 – July 08
Published for the web: July 25 08 12:18
Last Updated: July 25 08 12:20
