NEW YORK -

Not every single General Motors franchised dealership uses Ally Financial to cover floor plan needs. While company executives say they're working to improve penetration levels, Ally leadership says it’s focused on another metric that shows the solid performance the company owns, stemming from its commercial department.

Jeffrey Brown, president and chief executive officer of Ally Dealer Financial Services, explained his thinking when Ally conducted its quarterly conference call as the company reported its first-quarter financial statement.

“Our floor plan has continued to have strong growth in average balances, which is really the metric we tend to focus on more than penetration levels. Obviously we’ve experienced very high penetrations with GM dealers and Chrysler dealers. It’s really their independent decision to make,” said Brown, who took over the lead of Ally’s dealer business in March.

“The key value proposition is what we go out and sell every day, which is being the one-stop shop, being the preferred lender, being the whole provider. Really no other competitor that we face can offer every product that we can — retail new, retail used, leasing, insurance and floor plans,” he continued.

“For us, it’s really the strength of our product offering and being able to do it on a nationwide scale. We are in all 50 states. Historically, that’s the way we’ve been able to maintain such strong levels and capture the type of dealer relationships we do,” Brown went on to say.

Ally reported that it had $33 billion in outstanding commercial notes as of the close of the first quarter. That amount is 1.1 percent higher than a year earlier.

The company reached that level even though Ally’s penetration levels with GM and Chrysler dealers sagged a bit in Q1. The penetration level with GM stores stood at 64.1 percent, down from 68.6 percent a year ago. The penetration percentage for Chrysler dealerships came in at 46.4 percent, off from 53.9 percent after the first quarter of last year.

Brown described the competition Ally is facing and how it’s growing the portfolio despite the penetration levels being a bit off.

“What we’ve been saying for the past three or four years is that it’s not really about a contract. Really the relations start at the dealer. For us, it’s been a lot of hand-to-hand combat over the last three or four years, but we’ve made progress, really selling those dealer capabilities, selling the partnerships, selling the platform,” Brown said.

After Brown shared his thoughts about the company’s commercial business, Ally CEO Michael Carpenter took his turn to summarize this part of the business.

“The commercial business from one perspective is a very straightforward business, and from another perspective it’s not,” Carpenter said. “It’s a business that not a lot of people can do, and certainly not a lot of people can do it with risk management. It’s a business that requires significant expertise and substantial infrastructure. The fact that we have an organization that can get into these dealerships every day and know what’s going on in their business has a lot to do with it.

“From the dealer’s point of view, this is the lifeblood of their business,” he continued. “Without having a good floor plan relationship, they could lose their franchise. They are all very well aware that in 2008, all these banks that today think this is the greatest business since sliced bread decided that they needed to shrink their balance sheets during the financial crisis. And the easiest and quickest way to shrink the balance sheet was to walk away from all of these dealers.”

Carpenter made a few more points before closing the topic.

“I would also add that switching is not easy. We are so embedded in the relationship,” he said. “When you look at these numbers, $33 billion, if you talk with J.P. Morgan, Wells Fargo, Santander, Capital One and added them all together, they don’t add up to our size in this business. Yes, we’ve lost some share over time, but frankly, I wouldn’t mind a few more businesses where we have 60 percent market share.

“It’s a very solid, very defensible from a competitive sense,” Carpenter went on to say.