Despite a number of auto finance institutions reporting pullbacks in originations this week, Ally Financial Inc. kept originations relatively flat at $8.9 billion in the first quarter compared with the same period a year ago, the company reported this morning.
“There is a more cautious tone across the industry, you’ve seen some other originations come down this quarter, and I think it has helped us take a little price,” Christopher Halmy, chief financial officer for the bank, said during the first quarter earnings call. “We are not focused on market share at this point, we’re focused really on improving our overall returns, so I think you’ll see it from our book’s perspective on the margin, [rather] than you’ll see it on the originations.”
Ally’s auto portfolio overall, was down year over year to $76.5 billion, from $80.2 billion during the same period in 2016. The decline was mostly due to a 30% drop in lease outstandings, as the company continues to cede leasing to GM Financial.
The bank also reported record-high used-vehicle originations of $4.2 billion for the quarter, up from $4.1 billion in 2016. Although the increase is modest, Halmy predicts used-vehicle originations could, going forward, occupy a larger percentage of the portfolio than where they stand today — just shy of 50%.
“We’re very comfortable in that space, it has obviously helped drive the growth channel, and our dealer relationships tell us this is really where dealers make most of their money,” he said. “We’re fine seeing that drift over 50%, and get into the 50%-to-60% range — so there’s no cap on that.”
Delinquencies and charge-offs both saw double digit percentage increases for the quarter.
Delinquencies 30 days past due grew to $1.55 billion, up 11.9% compared with the same quarter the year prior. As a percentage of overall outstandings, delinquencies accounted for 2.36%, up from 2.20% in 2016.
Charge-offs grew by 45%, to $251 million in the quarter. As a percentage of average loans and leases in the portfolio, charge-offs accounted for 1.54%, up from 1.08% in 1Q16. The company’s loss provisions increased by $59 million year over year, to account for the increased losses.