Ally Financial Inc. originated $9.2 billion of loans and leases last quarter — a 3.3% year-over-year decline — with used-car originations accounting for 56% of the volume, the company reported in its earnings release.
Used originations accounted for 50% of the volume in the prior-year period.
Ally originated $5.2 billion of used-car loans last quarter, which reflects the bank’s positioning to drive used originations to adapt to a “shifting market” in auto finance, Chief Financial Officer Jennifer LeClair said during the earnings call. “Originations through these channels allowed us to offset the impact of lower new-vehicle sales,” she said.
A focus on the used market is a strategy that is set to continue for the bank this quarter. “We’ve been mindful of the auto ecosystem shift and built an adaptable platform that positions our franchise for the long term,” LeClair said. “At the dealer level, we aligned with trends in the used category, where momentum has continued to build.” The lender is sourcing an estimated 3.2 million applications per quarter from dealers.
In addition to the used volume, Ally originated $3 billion in new retail volume and $1 billion in leases. Ally expects about 4 million off-lease vehicles coming into the market this year. With the increase in supply, Ally will “have to manage the dynamics around demand, and so far demand has outpaced the supply,” LeClair said. “With the off-lease vehicles and the peak, we’re going to hit here in 2019, we just have to be watchful.”
Meanwhile, net charge-offs dropped 15 basis points to 1.32% of the portfolio in the quarter, and 30-day delinquencies declined 5 basis points to 2.56% of the portfolio.
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