Mon, 02 Oct 2023 17:28:01 EDT
Ally offers buyouts with layoffs possible
Ally Financial will offer buyouts to older staff within its Dealer Financial Services segment, and further work force cuts might occur in November, Ally Financial Dealer Financial Services President Doug Timmerman has told staff.
An image of part of a Timmerman email describing the headcount plans in its auto lending business was posted Sept. 29 to the CarDealershipGuy LinkedIn page; Ally spokesperson Peter Gilchrist confirmed its accuracy to Automotive News. Gilchrist declined to share the full message.
"Despite a challenging macroenvironment, we remain relentlessly focused on serving our customers and all stakeholders by making the tough, yet necessary, decisions to guide our business into the future," Gilchrist said in a statement. "After taking steps over the past year to pause hiring and manage staffing expenses through natural attrition, we have made the difficult choice to selectively reduce our work force. We are deeply committed to supporting those affected and are offering a robust severance package and career outplacement support."
Timmerman wrote that Ally would offer "select employees" age 63.5 years or older voluntary severance packages including the ability to purchase health insurance through COBRA until they would be covered by Medicare, calling this "a top concern" among those considering retiring.
"Decisions related to additional work force reductions will be determined once cost results of the voluntary program are finalized and will be communicated by early November," Timmerman wrote.
"The leadership team and I have the highest respect for the individuals being impacted by these efforts," he added. "These are hard decisions, but they are necessary."
Gilchrist said staffers affected by its cost-cutting measures could apply for other openings within the bank.
"We remain confident in our long-term strategy, with a strong balance sheet and nimble, scalable businesses that are poised for future growth," Gilchrist said.Recent resultsAlly's second-quarter net income fell 32 percent from a year earlier as the bank drew less financing revenue, set aside more money to cover potential losses from loans and experienced an increase in other expenses. Its auto lending business — the bank's main source of income — brought in 17 percent less pretax income in the second quarter, though Ally attributed this to nearly record-low losses a year earlier.
Ally wrote $10.4 billion in consumer auto loans and leases in the second quarter, down 22 percent from a year earlier but up 9.5 percent from the first quarter. Its volume of loan and lease applications grew 6.7 percent year over year to 3.5 million, however.
Ally had relationships with 22,171 dealerships in the second quarter, up 2.8 percent from a year earlier.
The Ally layoffs come shortly after the head of another major auto lender, Truist, told the Barclays Global Financial Services Conference on Sept. 11 that it would cut about $750 million in costs over 12 to 18 months. These cuts would include $300 million through layoffs and another $250 million in changes to the structure of Truist, which was created out of the 2019 merger of BB&T and Suntrust.TruistTruist CEO Bill Rogers told the Barclays conference that one part of the layoffs would involve consolidating 21 geographic regions to 14. It would retain client-facing personnel, he said — "no change in that" — but instead make cuts to personnel in "infrastructure" such as marketing, he said.
Truist spokesperson Brian Boudreaux told Automotive News Oct. 2 that the bank hadn't announced specifics about its direct and indirect auto lending businesses. He said the bank sought to"focus on our strengths" and on longer-term financial performance.
"We're hiring in some areas and rightsizing in others through natural attrition and planned staffing reductions," Boudreaux said in a statement. "We're committed to supporting affected teammates as they seek to find employment opportunities – with Truist or elsewhere."
Rogers did call indirect auto lending one of Truist’s “complementary” businesses which would “be less strategic from an investment standpoint” to the bank in the future than “core” businesses offering more of a relationship between Truist and its clients.
“Those are going to be more optimized,” he said of the complementary businesses. He said Truist’s focus for those segments would be on returns and “edges of relationships.”
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