Ally Financial’s Kucharski Sees Auto Lenders Ready to Handle Increase in Consumer Demand With More Financing, Lease Offers
I recently spoke with Jim Kucharski, who works with auto manufacturers such as General Motors Corp. and Chrysler Corp. as vice president of Alliance Sales at Ally Financial. According to Kucharski, 2013 should be a good year for the auto industry because of significant, pent-up demand from buyers (both consumers and businesses) who deferred sales during the recession. In addition, the average vehicle on the road in the US is more than 10 years old, encouraging consumers to trade in this older fleet for newer models.
Ally forecasts that the auto industry may sell at least 15 million units this year, an increase of about 3-4 percent. The last time the U.S. auto industry sold 16 million vehicles was in 2007.
In addition to the demand generated from the replacement of old vehicles, the industry expects to benefit from almost 500,000 more lease returns this year compared to last year, which should result in either new leases or purchases, Ally said. A recent Wall Street Journal report said that design “refreshes” in the midsize-car market should help that segment to continue to lead the industry. Overall, more than 40 new vehicle introductions are expected in the U.S. this year, more than twice the number in 2012.
“From our perspective, we see tremendous demand by consumers and supply by lenders to handle consumers with a variety and breadth of credit capacity and scores,” Kucharski said. “Not only is the auto market growing, but the auto finance market is growing.”
Kucharski’s optimism is likely reinforced by the financial results his company posted last quarter. A 60 percent jump in lease originations in its automotive finance unit helped Ally turn a profit last year, compared with a loss the prior year. Formerly known as GMAC Inc. and owned by GM until 2006, Ally is the biggest US auto lender, and is majority owned by the US government, which took a controlling stake as part of the bailout of GM and Chrysler.
Kucharski said that about 20-25 percent of new buyers of GM vehicles will decide to lease them instead of make a purchase. “As the used car market has become more robust and more predicable, manufacturers and banks have been willing to do more leases,” he said. “That’s a benefit for the consumer, especially if they only want to keep a car for 24 to 36 months.”
Consumers that prefer leasing vehicles often do so because they are offered deals with lower monthly payments and less cash upfront. But be aware of the full cost of leases. To learn more about the latest “twists” in lease financing, check out this latest article on Edmunds.com, a car-buying website. It explains how lease terms are determined, and what consumers should expect when they’re shopping for one. Kiplinger’s also offers helpful tips in an article outlining five myths about leasing a car.
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About the author
Christine Dunn has almost two decades of experience writing about finance and business issues. As founder and president of Savoir Media, she works with companies and executives on developing strategic, integrated media and marketing programs. Prior to starting her business, she worked at Bloomberg News, where she served as Boston Bureau Chief and ran industry coverage for several national teams of reporters, including consumer/retail, mutual funds and education. To reach her directly, email ChristineODunn@gmail.com or join her on Facebook at www.facebook.com/ChristineODunn.Recent blog posts
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