Ally Financial posts highest Q3 auto originations in 15 years

Ally Financial again posted a 15-year quarterly record for auto originations in the third quarter, driven by high used-vehicle values and record application volume. Originations clocked in at $12.3 billion for Q3, an increase of 25.5% year over year as the lender received 3.3 million decisioned auto applications — also a 15-year record — bringing Ally’s total consumer auto portfolio to $88.7 billion. Record Q3 origination volume follows second-quarter record origination volume of $12.9 billion . The growth is due in large part to Ally’s dealer relationships, Chief Financial Officer Jennifer LaClair said during today’s earnings call, noting the lender has surpassed 20,000 active U.S. dealers who purchased at least one of the lender’s auto products as of Q3, up from 18,000 at yearend 2020. “We’re really seeing dealers thrive in this market,” she said, noting that more than 95% of Ally’s dealer partners are profitable. Credit performance also remains positive. While retail auto delinquencies for loans 30-days past due ticked up 23 basis points (bps) sequentially to 1.83%, they remain 42 bps below Q3 2020. Retail auto loans 60-plus days past due also increased 6 bps from Q2 to 0.38%, but declined 9 bps YoY. Net charge-offs for the retail auto portfolio increased to 0.27% following a 0.03% recovery rate in the second quarter, but remain down YoY. Allowance for loan losses for auto loans totaled $2.8 billion, or 3.62% of outstandings, a decrease of 8 bps from Q2. “We remain well reserved for the eventual and gradual normalization of losses,” Ally Chief Executive Jeff Brown said. “We've maintained a disciplined approach to underwriting and collections and increased our use of advanced data, enhanced technology, and innovative self-service tools for dealers and customers.” Meanwhile, high used-vehicle values continued to support lease yields. The number of consumers who terminated their lease in Q3 totaled 34,475, a decline of 293 from Q2, but an increase of 5,558 from the prior year quarter. Ally posted an average profit of $2,495 per vehicle through remarketing, contributing to lease yields of 9.21%, a sequential decline of 246 bps but an uptick of 132 bps YoY. For retail auto loans, average yield sat at 6.62%, down 8 bps from the previous quarter but up 6 bps YoY. New origination yields came in at 7.10%. “Overall, auto continues to perform exceptionally well, and we don't see any signs of that stopping based on market trends,” LaClair said. On the commercial side, Ally Financial’s floorplan outstandings declined 8.4% YoY to $7.6 billion, a sequential decline of 2.4%. Floorplan outstandings have declined sequentially since the fourth quarter of 2020, in line with industry trends as inventory remains constrained. “We expect floorplan levels will remain low through the latter part of next year, which provides ongoing structural support for used-vehicle demand and values,” Brown said. Shares of Ally Financial [NYSE: ALLY] were trading at $52.65 as of 3:53 p.m. ET today, down 5.64% from market open. Ally has a market capitalization of $18.7 billion. Auto Finance Summit, the premier industry event, returns October 27-29 in Las Vegas. The Summit continues to bring together the best and brightest in the industry year after year for unparalleled networking and professional education. To learn more about the 2021 event and register, visit www.AutoFinanceSummit.com .

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Ally Financial posts highest Q3 auto originations in 15 years

Floorplan outstandings decreased YoY and sequentially

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Lithia Motors credits record F&I revenue to high demand in Q3

New CFPB report undermines disparate impact rationale

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