Auto lending continued to carry Ally Financial in the first quarter, as Ally said today it posted total net income of $310 million for the quarter, more than double its year-ago profit.
The other big news for Ally was that the Chrysler Group notified Ally on Wednesday that it won’t renew its semi-exclusive contract to provide Ally with factory incentives.
Meanwhile, Ally’s troubled mortgage lending business continues to be a black cloud. Mortgage results improve somewhat compared with the fourth quarter, when Ally took a big one-time charge related to problems with foreclosures.
Auto profits
Ally’s North American auto finance business posted $442 million in income from continuing operations. That was down about 15 percent from the year-ago quarter. Company officials said in a conference call today that a higher level of factory incentives boosted originations in the year-ago quarter.
For the first quarter of 2012, U.S. consumer originations for auto loans and leases were $9.7 billion. That was down from $11.6 billion a year ago, but an increase of about $500 million from the fourth quarter of 2011.
First-quarter originations also included a lot more used cars -- 27 percent of the total, up from 20 percent a year ago, the company said.
“The year-ago quarter was driven by incentives,” said Ally CFO James Mackey.
Getting religion
Ally CEO Michael Carpenter said competition is heating up across the board in auto lending.
“All of a sudden everybody’s got religion,” he said.
“The best way to get more business is to take more risk and less margin, and they’re (competitors are) doing that. In the crisis, they headed for the hills as quickly as now they want to get back in,” he said.
