Near-record auto lending drives Ally Q2 profit higher

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NEW YORK -- Ally Financial Inc. originated near-record auto lending volume, and added more than 900 U.S. dealerships since a year ago, to produce a comeback in net income in the second quarter.

Ally today said it posted net income of $323 million for the second quarter compared with a net loss of $927 million during the same quarter last year. The year-ago loss was tied to a $1.6 billion settlement in the bankruptcy case of Residential Capital, better known as ResCap.

The company said its auto finance business posted pretax second-quarter income of $461 million, up from $382 million during the same quarter last year and $339 million in the first quarter.

Total U.S. consumer loan and lease originations were $10.9 billion for the quarter, up from $9.8 billion a year ago. Second-quarter originations were Ally’s second highest ever, the company said.

“The increase in dealer relationships continues to be a very steady uptick, quarter after quarter,” said Jeffrey Brown, CEO of Ally’s dealer financial services unit.

The previous record was $11.6 billion in loans and leases in the first quarter of 2011, driven by a large General Motors incentive program, the company said.

More volume, fewer spiffs 

For the past few years, Ally’s share of incentivized business has been declining. Ally was the preferred lender for both GM and Chrysler, with first dibs on any incentive offers from those manufacturers, but the exclusive nature of those relationships has been phased out.

In the second quarter, subvented, new-vehicle loans for GM accounted for 8 percent of Ally’s originations, down from 14 percent for GM and Chrysler combined a year ago. Ally reported zero subvented loans for Chrysler Group in the second quarter. That was the fourth quarter in a row with no subvented business from Chrysler, and down from about $200 million worth a year ago.

Meanwhile, Ally’s standard-rate loan volume with Chrysler Group dealers rebounded in the second quarter to about $1 billion in originations, up from about $700 million in the first quarter and about even with a year ago.

“We’re very pleased to see that rebound from where we were in the first quarter,” Brown said.

Ally also reported increases in overall lease volume and in loans via non-GM and non-Chrysler dealerships.

“The loss of subvented business was more than offset by other areas,” CFO Chris Halmy said.

Used-car loan originations were a record for any quarter at $3.1 billion, up from $2.5 billion a year ago, the company said.

More dealerships 

Ally said its dealership count had increased about 900 from a year ago, to about 16,400. Most of the increase was in non-GM and non-Chrysler dealerships, the company said.

New-vehicle loans via non-GM and non-Chrysler dealerships accounted for about 8 percent of Ally’s origination volume in the second quarter, up from 6 percent a year ago.

Ally said it had a record number of credit applications in the second quarter. Brown said, “We’re getting a lot of looks.”

You can reach Jim Henry at autonews@crain.com.

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