2020 FIRESIDE CHAT

JJ Hornblass 00:00
20th annual auto finance summit. Thank you so much for your participation yesterday. And we’re looking forward to just another excellent day of digital sessions and networking. And I hope you’ll partake in all that we have to offer today. Once again, I want to thank you for allowing us to make a charitable donation to access education foundation. And I hope you’ll visit with Absa e f.org. To learn more about the important work they’re doing and to join our effort. We are grateful for the support of our sponsors this year and particularly this year, and I want to thank them by name starting with alpha our diamond sponsor is our platinum sponsor, and sponsors call center services console automotive DDI technology defi solutions, Experian, and Nova tack, open lending PDP group, prodigal send D link, smart option and Walters klore. We really very, very much appreciate your support. And It’s now my pleasure to kick off the day’s events with our fireside chat with Doug Timmerman. This session is sponsored by prodigal and want to thank them once again for their support, and sponsorship. And before we get into our session with Doug, here’s a quick message from our sponsor.

01:38
profitable runs advanced AI models on all.

JJ Hornblass 01:43
Thank you again, prodigal. And welcome, Doug. It’s good to see you hear. And it’s good to to have you a part of this. of the auto finance summit. Welcome.

01:56
Good to be with you as well.

JJ Hornblass 01:59
Sure. So, just a little bit about about you jog. first before we get into the discussion. So you became president of Otto and ally financial 2018. And you’re not just like you just didn’t just start you know, start an ally. I’ve got you down. Joining ally in 1986. Is that number, right? Because, you know, you look way beyond God.

Doug Timmerman 02:35
I already put out by road miles I gotta show you but 9930 3040 years on October, sex.

JJ Hornblass 02:45
Yeah. Wow. Congratulations. Congratulations. And you were you were born and raised in a small town in Nebraska. I’m not sure which town that was. What town was that?

Doug Timmerman 03:01
Right, right up? Not too far outside of Oh, yeah.

JJ Hornblass 03:05
And you were you were named the 2019 Auto finances Executive of the Year. And in that article, it discussed how you would work. You worked on a farm during the summers, I from your day started 4:30am. I’m assuming that’s a typo or it is not a typo. And he wouldn’t go to 8pm and I failed bale hay men fences and do something called tackle corn. I’m from Manhattan. I have no idea what tackling corn is what is that dog

03:51
that is supposed to be paddling corn, which is

03:57
six foot five so

04:00
very good. Before Yeah,

JJ Hornblass 04:02
well, we’re not gonna keep you until 8pm That’s for sure. So ally is the third largest auto finance company in the nation. Just just some quick numbers for our for our audience just to give them some perspective. Ally financial as a 10 point 6 billion market cap now proximately about 100 and 15 billion of auto assets on the balance sheet that’s across a bunch of different categories. And and last quarter 9.8 billion of originations auto originations, a record number, I believe, or at least for the last five years, a really a tremendous, a tremendous originations figure, so maybe that’s a good starting point for us. Talk about big for our discussion, because here on the one hand, you know the numbers. I mean, this is for ally, but but let’s just you know, there are other lenders also enjoying, you know, positive numbers in the market. Yeah, we’re in the middle of this pandemic, and unemployment and recession and so on. Give us a sense for like, from your perspective, running allies, autism, what is going on out there? What is the state of Canada auto finance landscape, and from your, from where you sit?

Doug Timmerman 05:40
I think, you know, maybe first and foremost, you almost have to step back and think about the early days of the pandemic. And, you know, I oftentimes refer to our view of body is really, who’s taken us through the pandemic that really led to the pandemic, obviously, they had, I think, the biggest challenges early on, they once again proven their resilience, they they’ve proven their ability to adapt, they were able to get consumers comfortable with the selling process, and obviously, the servicing process. And it’s just a it’s a great testament to our industry. But most importantly, it’s a great testament to our dealer body. And, you know, if it wasn’t for their resilience and their ability to adapt, you know, others, like us wouldn’t wouldn’t be enjoying the success that we’re having. You know, certainly we are part of that, obviously, provide substantial relief efforts to our dealer bodies, consumers, and I think those believes efforts, you’re helping the confidence of the dealers to do the things that they’re doing. But no doubt it goes back to the dealer body forward to like the momentum building, build, or compliments, we think forward? Well.

JJ Hornblass 06:57
What’s really at the root of that confidence. I you know, I mean, like you have, you have the potential for I don’t know, if we’re in the second wave or third wave or whatever. But certainly, you have the potential for additional quarantining. I mean, we were just we were talking before we got on at the University of Michigan, you know, what, you know, what, where are you? Why do you feel so confident? I mean, you know, and maybe what’s the argument for or against kind of thing?

Doug Timmerman 07:30
Yeah, I think it’s a function of the momentum, I think that’s a function of the fact that we’re seeing consumers resilience. You know, a lot of our confidence comes from the dealers, you know, despite the fact that they’re selling the last record profitability. And, you know, I think the feedback that they’re getting from the market and for the consumer is positive. Obviously, there’s a lot of consumers that have been impacted by the pandemic. But there’s also, you know, a large part of the pie that no pie frankly, is, you know, still employees still getting paychecks. Arguably, they’re not spending money on things that they said pre pandemic, and your savings rates are going up. And so, as those savings rates go up, you know, they’re looking to where do they want to spend some of that money and a lot of that money has been spent into the, into the auto business. And, again, I don’t think that consumers would be stunning, if they weren’t really comfortable with what dealers have gotten off of the selling process and making sure things are gradually moving their business models forward. There’s deceleration of the consumer desire to shop online. viewers have done a very good job of accommodating that. We’ve talked about digital processes, I say, you know, digital processes have gotten better, but yours have done a great job of complementing the digital processes with virtual processes to get the consumer comfortable the selling process in

09:10
addition to

Doug Timmerman 09:12
our use car, and I think this they go back and they talk to their family and friends experiences back. Right. And that has kind of a domino effect for other people consider purchasing so

JJ Hornblass 09:25
so if you had to pick a, you know, a factor that might change that, that prognosis me What would be your number one risk factor that would lead you to say, you know, what, we were on this trajectory. And now we’re not I mean, for example, I mean, he you do you see a great necessity for additional stimulus, I mean, stimulus certainly had some contribution to consumer behavior over the last, you know, Let’s say quarter or something like that, and what’s your what’s the thing that is kind of, you know, one or two, in terms of your, you know, that you’re looking for in this regard? Yeah, that’ll

Doug Timmerman 10:12
definitely help. And I think another round of stimulus is necessary, I think, ultimately, we’ll probably see another round of stainless. So that’s been a driver. And I think that will probably give us another shot of the arm relative to going forward. Obviously, you know, where’s the virus go from here, is considerably higher than we’ve we’ve seen, that obviously is starting to spike today. But if we get to the point of, you know, shutdowns and foreign things that obviously that’s a factor. Unemployment rate is something that we always watch very closely, obviously, slightly below 8%. I think that’s better than where we thought it would be. If we go back and look at the forecast early on, and, you know, as we think about unemployment, you know, through 2021, what we think in the next year, we get in the 6% range. So the things that we’re saying the things that drive our forecasts and our planning is please see continuous improvement from here. Because the consumer is very healthy. As you know, we did a lot of deferrals. I think some people looked at ally and said, Do 290, and we’re going to comprehensive but early on in, in the dynamics are going to cause it wasn’t a 30 or 60 or 90 day of that, but we thought more comprehensive, we thought that we had to get out and offer that belief fairly early on 1.3 million, and in the pearls equals 30% of our gloves. And if you kind of look at where we’re there, where we’re at today, we have just 1.3% of our total customer population under deferral. So it was 30% and took it today, just 1.3%. And I think that’s reflected about, you know, the confidence of the consumer and the health of the consumer That in itself. And of course, we just reported third quarter earnings. And then look at our delinquency rates 30 day delinquency was below 3%, at the end of the third quarter, which is a low number in normal times, much less a pandemic. And if you look at our net charge off, right, and that charge off rate was actually, you know, less than half of what it was a year ago. And in delinquencies, net charge offs are going to increase from from here going forward for the entire industry. And of course, that includes us. But again, everything that we’re looking at, we didn’t increase reserves in the third quarter, we don’t expect to increase reserves in the fourth quarter of 2021. And, you know, we think that there’s a pretty good opportunity to outperform as well. So never say never, you know, I don’t know, if we’re in the third inning or the sixth day, I don’t think we’re in the seventh or eighth ninth inning here. So there’s a lot of things that could change to your point, but play the game as it is today. And obviously plan for scenarios left and right as well. So,

JJ Hornblass 13:10
sure, I mean, it you know, I think it’s, you know, you’re, you know, you you know, as I said in earnings last last week that, you know, you’re expecting peak losses in 2021. For this cycle, so, so first of all, I mean, you know, you’d have a sense for, you know, more specifically, like, when are you do you feel like that’s, you know, one q two, q one first half said, and then also, like, you know, what is what do you think Pete losses look like? Not not just not just for you, you know, but for the sector? I mean, what, what does that look like, for all of us?

Doug Timmerman 13:54
Yeah, I, you know, I think the thought processes to when they speak, you know, probably depends on next round of stimulus, assuming there is one, I just said, there’s more stimulus that will push it, you know, later in the year, but I’m not sure if it’s, you know, if it’s late in the first half, or towards the second half, you know, for us, it’s, you know, very important that you staff up and make sure your teams are ready no matter where it comes in. So, if you look at our headcount today, look at our staffing work, we’re actually probably staff, you know, a little heavy today. But that’s a good place to be because we want our staffing to be in position when we do see those peak levels. And I you know, relative to where does this all land, you know, from an industry perspective, or from our standpoint, other than saying that we feel very comfortable and the reserves that we have are adequate. You know, that’s probably the best perspective I can provide you and, you know, there is a lane You know, I think our lane is towards our performance and you know, hopefully the mo take some of those reserves back in then, but

JJ Hornblass 15:00
Yeah, I just want to remind everyone that you can submit questions in the event platform. And I’ll get them here and share them with with Doug. I mean, look, the the reserved number for you guys is is having them for on a relative basis. It’s a pretty high number 3.4 billion, I believe. And, and yet, on the net charge off side, last last quarter, on on autos, I mean, then, I mean, you’ve got to have been, I mean, surprise to the positive there. I mean, you’re, you’re running numbers that are, I think I’m not like a ally expert, but I believe that they’re kind of unprecedented for you. I mean, you know, you’re, you’re now talking about net chargers getting to like that 1% number. I mean, that seems, you know, where you’re running, you know, originations across spectra across the spectrum, across the credit spectrum, or, you know, that, that that seems like a So, you know, I guess I’m asked, you know, I look at those two numbers. And it’s like, one of them kind of seems out of sync with the other, either there’s too much, you know, credit, reserve loss reserves, or the net charge off number has to go. It just seems like, What’s your feeling? I mean, you’re talking about kind of reserves coming back to as income? I mean, is that where you are, you know, that’s kind of where you’re leaning? Doug?

Doug Timmerman 16:38
No, I would say at this point in time, you know, our perspective is the fact that we’re adequately reserved, obviously, based on what we see today as a potential for us to outperform. I think, you know, yeah, there is potential for us outperform we don’t see are necessary to build reserve. So, and we’ve given our guidance, relative charge off rate is one two for the year, with the potential to go as low as 1%. But, you know, the entire industry, you know, I think is very similar perspective, and they work now performing to some degree, but, you know, we’re gonna see higher delinquency rates, we’re gonna see, you know, higher charge off, right, it says, as we go forward. And, you know, I think, you know, if there’s been a surprise, I think the fact that the consumers bent a little bit more resilient, early on, that people anticipate, I think we stimulus at a better, bigger impact. We’ve been very vocal as accurately stablish, our reserves when we didn’t put a lot of thought relative to the impact relative to stimulus. So symbols definitely helped. And like I said before, if there’s another route of symbols, which hopefully there will be that, that that will be a shot are important. Now.

JJ Hornblass 17:52
Let’s talk a little bit about that originations, you know, that that kind of what was behind that? So I mean, you know, first of all, you know, just a tremendous number coming in on the quarter. Can you give us a sense for like, what was underneath that, like, where were in on the credit spectrum that came in? Like, did you know, was it more, you know, where did it and kind of where, what part of that of that originations mix was kind of VGA expect or not expect? You know, what was sort of like underneath the hood there on that?

Doug Timmerman 18:26
Yeah, so 9.8 billion, quarter, as you indicated, that was our best quarter for five years, you don’t expect to have your best quarter in the third quarter, you surely don’t expect to have to during a pandemic. And, you know, we’ve had a shift towards more us business and lost new business. So if you think about balances, you know, the average balance on a US contract is about half of the news. So, you compare to that, where we were, you know, five years ago, obviously, we had to do a lot more volume relative to the contracts. We did, we looked at 3.2 billion applications, you probably hear me talk a lot about the blocking and tackling associated with the business. And one of those blocking and tackling strategies, tactics and focus has been, you know, to look at every viewers application for willing to do the work, we’re wanting to look at every application. And hopefully, by doing so we can help you sell more cars and trucks. And that’s different than those most, you know, they want to look at both the look right, so one of them a little bit different perspective. We’ve invested significantly and in data and analytics, and our consumer router right inside of our businesses, as well as spent a lot of time and our learnings relative to alternative data. And all of that has helped us automate more of our decisioning and obviously, without a decision improves the viewer experience and improves the customer experience. But it also lets us you know, look at a larger volume application. So application flow really drove it. I think The team did a tremendous job relative to do our engagement. We’ve seen some lenders that have kind of stepped away from the business, which is very common when things get challenging some lenders, you know, will get out of auto and they’ll focus elsewhere. Obviously, that’s not our thinking. And so,

JJ Hornblass 20:18
on the newer us side in particular, did you see that? That was generally speaking? Yeah, not.

Doug Timmerman 20:26
And that’s, you know, you have a couple of dynamics, you have those that are, now I say, a little bit of Fairweather fans so that, you know, when things get difficult, they’ll step away from auto or maybe step back. And you know what, we’re pretty good at this. We’ve been doing it for a while, and first autos a significant portion of our business. And so we continue to stay in play. And I think that is, that is no doubt helped us as well. And then if you kind of look at the OEM incentives, OEM incentives have not like they were in 2019, and 2018. And the first OEM and stenosed provides the captives a lot of kind of advantage, if you will. And so what was those OEM and setup status itself is do a little bit more than in the new space as well. But we play in the belly of the credit curve, which I think really substantiates how big 9.8 billion is, we’re a full spectrum lender, but if you look at the majority of our businesses in the, in the belly of the curve, and we do that one, because we like the economics, but more importantly, that’s the segment of businesses most important to the viewer, high level sophistication.

JJ Hornblass 21:37
Guy, man, it seems like this sort of application flow is a real key. For you guys, today, I saw a number that the the pace of application share pace of shared application is going up like 13% 13% k Gar, you’re kind of generating more inflow of applications. No, like I talked about the data analytics that might be driving that. But I mean, what is also the date Are there other factors, I mean, what what is kind of like leading to this, you know, kind of greater influx of applications coming, coming to Allah,

Doug Timmerman 22:23
but a little bit of a cause and effect. So our teams are very active and asking the dealer for the application flow. And when the dealers send the application flow through us, they get positive reaction back. And so consequently, that positive reaction back with us saying yes to no applicants that are helping them sell more cars, or trucks, or helping their economics or helping them relative the speed of decision getting those animals back, all those things, the positive reinforcement viewers are getting by sending us application flow is really I think books are kind of creating momentum.

JJ Hornblass 23:01
Look at the application flow, and kind of the, you know, the type of customers coming to ally. Now, I mean, particularly Now, during this period, I mean, do you do you see anything different about the consumer, um, in some way? And and do you think like some of those changes? and to what degree or might they be lasting or not lasting? I mean, we, you know, for example, I mean, we, you know, we’re seeing kind of National Credit Score numbers at record levels. But are you, you know, is it? Is it? Is there anything, you know, what’s inside, you know, what’s the customer Like, right now? What’s the state of the customer? And is that kind of, you know, do you see that extending beyond this whole craziness that we’re in?

Doug Timmerman 23:51
Yeah, no, I think what’s your I think what you’re saying, is the application flow that we look at it on, ultimately say yes, because it’s those applicants that have stayed employed during the pandemic and continue to earn wages, by frankly, you know, we’re seeing deposits that could be more significant for down payments to the higher as well. So I think in kind of an interesting lab, I think the pandemic has segmented out a consumer that is, you know, quite frankly, more healthy. So during the pandemic, we’ve been phenomenologically leading and and the reason why rolling is because we see those applicants as you get further into the pandemic, but they’ve proven they’ve kept their jobs are contingent on wages to continue to to society. And quite frankly, his take is your thing forward, you’ll you’ll see those situations continue. So and the dealer feedback is very similar. I think there’s this thought and even during stem was that there was people that have stimulus money and they were running into by default, and of course, you’re going to have some of that, but most of this is Demand

25:03
results and helping.

JJ Hornblass 25:07
Yeah, sorry. Sorry. Sorry. I mean, we have seen a little bit of a reluctance among the consumer to take on debt. I mean, that has, and that also happened that the, you know, after the credit crisis as well. I mean, clearly, that’s not showing in your numbers. So whatever, you know, it’s it. But But I mean, does that does that bear into your thinking at all that you might see, you know, kind of less of an appetite? You know, for for consumer credit on the part of the American consumer?

Doug Timmerman 25:39
No, I think that’s a function of, you know, what your comment, I think, if you look intolerable, certainly that can be the case. But if you look at the segments, again, that are employed, continue to earn a wage, and often in their ongoing employment, I think the demand from that side windows is essentially offsetting the other segments where you don’t feel that so

JJ Hornblass 26:01
let’s talk a little bit about the used car market event dog, you know, I know that it’s very important to ally and use car values. I don’t you want me to read what you said, about use car values? At the end of 2019? For 2000?

26:24
more gas, I think

JJ Hornblass 26:28
that’s why I’m not gonna read it, but let’s just went in the complete opposite direction. Okay. Now, you know, there’s there’s no way that, you know, I think we all we all agree that they use car values or not, are heading in is, you know, in the, in the declining direction for 2020, I guess the question I wanted to ask is, you know, like, first of all, like, you know, what’s your feeling for how significant that will be? Going into, you know, the New Year, especially, as you know, new car inventories really start to kind of turn around? Probably in one queue. But also, you know, if I can ask you, you know, okay, you know, how do you how do you approach the used car business? When you kind of see that coming down? How does that sort of change the way you approach the business?

Doug Timmerman 27:24
Yeah, I would, you know, they obviously, the industry missed, what is happening today? Well, but the strength of his vehicle valuation, but, yeah, for from our vantage point, you know, I think valuations are gonna hold and probably holds stronger than anyone had, obviously previously anticipated. And maybe more than what some anticipated today, there’s, there’s ultimately going to be some downward pressure, I think, you know, that downward pressure might be more towards the second half of next year than it is in the first half. So I think they’re gonna hold pretty well, in the in the short and medium terms. We think that if you look at it on a clock in one versus 2020, maybe usually evaluations will be off two or three percentage points. But you’re going to have continued pressure relative the supply and demand aspects. And a lot of that goes back to, to the to the new vehicle sign, I think it’s going to be a while until new vehicle inventories, get all normalized levels against future sales. But and I think that’s going to help and I think you’re going to have this ongoing kind of consumer sentiment to to think about use us vehicle purchases, the orange like it, consumers are recognizing the quality of used vehicles, but if we liked the segment, as well, and they’re kind of interested enough, during difficult times,

28:51
performs better than

Doug Timmerman 28:53
our we play what the opportunities are, but we don’t have a different way laughter arrived new or used. We kind of played where the opportunities present themselves. And again, to my earlier comment, I think OEM and signups are going to have a you know, on the lighter side as we go forward again, because the supply demand dynamics and that’ll take some of the some of the advantage that captives have from those inside out. So I think that’s going to give us the opportunity side. So we’re also optimistic about what it’s like to watch the news as well.

JJ Hornblass 29:24
You wouldn’t you don’t think that you wouldn’t modulate. your appetite might might lessen a bit for leasing. Do you think if that’s the case, I mean, is that do you feel that way? Or Not really. It looks like we may have lost Doug’s internet. So please just bear with us for a moment. Doug, I think are you? Are you back with us?

30:23
I’m gonna see you guys fine. Can you not say?

JJ Hornblass 30:25
Yeah, you’re good. Sorry, I cut out for a second, I asked you about leasing, whether your appetite for leasing my my lesson a little bit if the used car market value if use values might turn in that in the direction that we’re talking about, you know, not relevant, I

Doug Timmerman 30:46
think one of our competitive advantages is being able to get the residuals, right. That’s what all these businesses up, you know, pretty significantly through the, and that I was looking at today’s reports, I think we’re up to 70 to 80% of it for the month going into the fourth quarter. So we like the leasing business, you know, you got to kind of play where the opportunities exist, depending on where the captives play out, but definitely all in Emily’s business for the opportunity to share.

JJ Hornblass 31:13
All right, so we got some good questions from the audience. Um, and Okay, so there’s a question about the impressive performance that ally auto has put up during these unprecedented times. And the question reads, how much of this performance came from your contingency plan?

Doug Timmerman 31:39
From our contingency plan? Did you know I was, you know, maybe relative to contingency plans. And this is really more of a function of our ongoing investments. As I mentioned before, we’ve we’ve invested a lot as a way as to relative to data and analytics and the learnings around alternative data. And you know, that no doubt is really helped our underwriting performance, but it’s also helped us, you know, find opportunities to say yes, more often and help your sell more cars. The other area that we’ve, you know, made significant investments is then on the technology side of the digital side. And so, you know, as dealers have really kind of challenged with the consumers desire to shop online, we’ve been challenged in ourselves, but also the consumers desire to to communicate differently. And I think from an industry perspective, you know, unfortunately, mostly communications are still done via telephone. And so we’ve made a concerted effort spent a lot of time energy and resources to really change up how we communicate with our customers. From my perspective, it’s kind of a lean towards or lead with tax compliment of a telephone, email, chat and our digital interfaces. And so that has helped us substantially because relatively digital interfaces, we have self service tools. And quite frankly, we could have done 1.3 million and deferrals. If we didn’t have the Self Service, though we’re tumors to go through the portal, and actually lift the pearls out of self service standpoint. So Case in point, but we’re saying, you know, if you look at all of our metrics, this is more on the flashing side of the business. But if you look at a lot of our metrics, seen better consumer engagement, better customer contact rates, better payment flows, better activity, and better usage of those self help tools, when consumers become delinquent, or in a case of repossession. So that’s really all the stuff that we’ve been investing in around, you know, focusing on the poor, the blocking and tackling. And the timing couldn’t have been any better.

JJ Hornblass 33:48
Actually, this this second question kind of relates to a it’s a good segue. So the question is, between origination and debt collection, and I probably add servicing, where do you see the focus? will be of lenders in 2021, for spending on automated solutions? And what’s the view of ally in this regard? And I guess we should mention that you completely modernize your servicing platform just relatively recently, but you know, kind of more on the automation from

Doug Timmerman 34:24
Yeah, no doubt is probably our number one focus and priority. And it goes back to all those investments that I just talked about, including our servicing platform. We’ve also made big investments at our smart option platform, which, as you can imagine, an online option works pretty well in a pandemic. And so, if you look at our option, activity, that is been really, really a strong part of our business. So from our standpoint is you know, no doubt it’s critical investment is continuing on to him. And, you know, I think the industry will probably invest too but you don’t invest in it. returns tomorrow. These are investments for the long term unfortunate ferocity but investing in long term and we’re reaping those benefits today, but there’ll be continued investments as we go forward as well.

JJ Hornblass 35:12
Let’s see your What’s your answer? What’s your expectations for consumer bankruptcy filings? In 2021, let’s say or, you know, through the end of next year?

Doug Timmerman 35:26
Well, yeah, I don’t have a specific forecast for you in that respect. But back to my previous points, you know, when we will say delinquencies rise from here, we will say, it’s our job. Right, right from here, and belated wise, gonna see vacancies, fortunately, going forward as well. But that’s my other point. You feel like that we’ve got that well reserved. So

JJ Hornblass 35:49
what’s the greatest regulatory compliance challenge for auto finance lenders today?

Doug Timmerman 35:58
You know, I think it’s, it’s really not your one challenge. It’s obviously keeping your arms around everything. And from our standpoint, it’s it’s really ingrained in our culture, our you know, our mantra is Do it right. And I think that’s right in line with everything on the regulatory front. And so we take care of our employees or employees will take care of our viewers and stay focused on our mantra, if that feel that, you know, we’ll also do well as alleged or revenue or expectations.

JJ Hornblass 36:31
A little bit about like, kind of, you know, just like, what it’s like working out ally Otto now, because of this all COVID pandemic, I mean, what’s it like? And what’s it like being the manager of such a large team there under these circumstances that

Doug Timmerman 36:56
we have everyone that previously worked in facilities are working from home. The good news for us is, we were able to do that very quickly. Our consumer underwriting teams that work from home for a long period of time, so we kind of had the footprint already in place. But it’s different, you know, I don’t remember the number but someone added up all the zoom hours that we have, and it’s a crazy number of hours. You know, my style is not one to sit behind the desk, I like kind of being out with the team and walking around spending time with our viewers, customers. So that’s all a big change. Fortunate for them, because I would absolutely go nuts if it was all conference calls with no video. But but it’s definitely different. And, you know, I think, you know, from our perspective is, we’ve tried to make sure that we understand the differences and recognize the fact that we’ve got to communicate more frequently, we’ve done some things relative to enhancing our benefits. And we pulled that out a portion of our incentive comp card saying so they could deal with and kind of the challenges today. And I think just making sure that we take care of our employees is really a very important part of the mind. And frankly, I think, you know, a lot of these things are things that we’ve learned from and will be part of our future as well. Work From Home as an example, we’re building out some of our collection teams that will be long term for promo, which gives us the kind of the same reason why we were doing in our consumer on the right hand side of our businesses, you’re not limited by geography, you can go out and find the very best talent no matter where they’re at. And we’re kind of leveraging what was kind of brought front of mind to us, but we didn’t take that step. But we’re taking that stuff on the production side and opens up the labor force to us. And we can, you know, hire the best talent, no matter where they’re located. And the feedback from the teams have been very good, but I think everything’s about balance. And we were probably a little bit too heavy, this slide and we’re definitely a little bit too heavy towards work from home and being able to find the right balance on forward I think will be what will be

JJ Hornblass 39:07
important for us, it’s good to handicap that, you know, like your current your current thinking on this dog, like, what do you what do you think that balance is? Like, you think it’s a 5050? dynamic? I mean, are you when even for you as an as a senior executive, I mean, would you expect to be 100% back in in the office as at some given point or even for you does outside of travel? We’re not talking about travel? I mean, you know, do you think that you know, what is that that kind of balance,

Doug Timmerman 39:44
I’d rather it because I I kind of dogs the office to begin with and try to be out in the field

39:52
and that’s where I want to get

JJ Hornblass 39:59
the rest As a team, let’s say even on the servicing side, I mean, would you expect it? It’ll settle at 6040 5050? Mm hmm. Yeah. I don’t know. Yeah, without holding on to it. But, I mean, what do you feel that balances?

Doug Timmerman 40:11
It’s a really hard question. I think it’s, I think it’s really dependent on what’s most important to RJ Max, to be honest with you. And I think that’s going to evolve, right? I mean, the nature of today, as much credit, especially if you have storage, is to be able to solve all those needs, as that evolves to be more normal, you know, several, like the flexibility of being able to work from home over the office, I think we’re going to be closer to indifferent and most of our most of our responsibilities, so. But yeah, we’ll also be heavily dependent on what our employees want for sure.

JJ Hornblass 40:53
Is it? Can you Is there a set like give a feeling for? I mean, I’m, you know, first of all, let me just say, will you be investing in this in 2021, in terms of, you know, capabilities, allowing the full complement of the servicing team to work work from home? Or, you know, improve that? So that’s first a, but then, I’m assuming you are, but if you are, you know, kind of how, um, you know, what, what kind of portion of the painting will go to that? How significant is that investment for you?

Doug Timmerman 41:27
Yeah, well, for us, you know, we work from home is working extremely well, today is there always going to be opportunity to fine tune, and maybe there’s new technology that comes about, to make it even better, you know, that that’s always going to be a possibility, but work from home is going extremely well, for our team’s feedback has been extremely good. And we’ve gotten all the resources out to the teammates, earlier today. So, you know, I think, you know, again, it will be about balance. And I think, you know, we’ll learn more as we get to that point in time that we’re not in a rush to get back to our facilities. This is about safety first, and, you know,

JJ Hornblass 42:12
we have a few more minutes left. So So let’s talk a little bit about, you know, kind of your expectations for the forthcoming year. And maybe a bit of a lightning round on that. So direct the direct model, you’re not expecting, you know, what’s your expectations for that? For ally? I mean, you’ve really kind of walked that back of it, is there, is there a future for indirect lending for ally in 2021?

42:47
They blame

42:51
lending.

Doug Timmerman 42:52
And I think if you look at all the stats, they’ve probably been avoided even further here during the pandemic, but you know, dealers are controlling, or the cells are controlling more than financing. You know, first and foremost, we focus on our dealer customers. And I think that’s the right focus for us. And I think that’s the future as well.

JJ Hornblass 43:11
I see you guys to very high profile, digitally oriented relationships, one with our carvana and the other with room, what’s your expectation? What’s your expectation for for that? In 2021? Do you expect to add to that kind of, you know, those kind of wholesale relationships?

Doug Timmerman 43:43
So obviously, your two very important relationships for us, there’s like, all of our relationships are, they’ve obviously got a lot of momentum, they’re doing a lot of good things, you know, definitely bullish on their models, but I’m also bullish in the other the more of an omni channel approach, as well as some of those that take more of a traditional approach. But yeah, from our perspective, no matter how a viewer goes to market, whether it’s a pure digital play, omni channel predator, or traditional, we figured out how we will partner well, and how we think about it is your idea or partnerships, how can we be a good partner and so that’s different for different dealers, but we’ve got to solve for all those and you know, we treat every partnership you know, as very valuable work. So,

JJ Hornblass 44:31
are there other carvana is are dreams out there for you?

Doug Timmerman 44:36
know, I think eventually there will be but, you know, I think you know, today you know, you obviously see you know, things that are some of the large public and private are doing, I would say more of an omni channel approach. Obviously, carmax is doing a lot of good things in their world as well. A lot of us small and medium sized stores are just phenomenal work right. So You know, and I think sometimes digital is, is, is probably used to work through too often I think virtual is oftentimes, the better way to how things are evolving today. But I’m impressed again by the entire dealer body. And it’s amazing again to my early comments as to how well to do or body has been able to, you know, put us in position as an industry to to enjoy the things we’re doing and hats out to the dealer team, for sure.

JJ Hornblass 45:28
So, final question. I mean, key sauce, as you think about modeling and forecasting for 2021 2223. What are your, you know, two, three key inputs that you’re sort of thinking on and really trying to get your head around to, to kind of come up with the best prognosis for the forthcoming years? Yeah, but relative.

Doug Timmerman 46:04
You know, I think we’re left as we have today, I think the fourth quarter will be good.

46:08
You know,

Doug Timmerman 46:09
if you want to talk about a star perspective, maybe a little bit north of 15. And I think we’ll get incrementally better at 2021, and maybe the back half of the 2021, and maybe get into the 16 million range, I think used vehicle sales are going to continue to be very, very solid. So we feel good about really most aspects of those business. And then on the credit side, obviously, stimulus is trying to mine, obviously, focusing on managing the club. But as I mentioned, work methodically leaning in, you know, as we go forward to because we think there’s an opportunity to do so. And, of course, focus on unemployment today, a little bit less than a percent. And we think by the end of 2021, we could be in the 6% range. If all that comes together. It’s going to be a really good year in 2021. For us, so

JJ Hornblass 46:58
I hope so. The the Hummer EV was introduced last night. And are you prepared for you a potential buyer down the road?

Doug Timmerman 47:10
They want to look pretty cool that So yeah, I didn’t see our products doing great products across all the OEMs. That’s, I think part of what’s exciting in this business, for sure. I don’t know that I can remember it’s online where there was so much great product out there. And the better, obviously, for sure.

JJ Hornblass 47:26
Doug, thanks so much was really really great spending time with you. And I really enjoyed it and very much appreciated.

Doug Timmerman 47:33
As always, thanks for all you guys are doing for the industry. saw was fantastic. feedback has been great. And we appreciate all that you do for us. So

47:41
thank you.

JJ Hornblass 47:43
Thanks. Thanks. This concludes our session.