Two of the largest U.S. auto lenders, Ally Financial Inc. and Wells Fargo, each grew auto originations by more than $1 billion in the third quarter.
The lenders are thriving in a robust used-vehicle market with rising loan values. Wells Fargo originations, 70 percent of which are for used vehicles, jumped $2.1 billion, or 45 percent, to $6.9 billion as the company regains ground in auto lending after a dramatic pullback a few years ago. Ally's growth also benefited from leases and originations related to new General Motors vehicles.
Ally originated $9.3 billion in auto loans and leases, an increase of almost $1.2 billion, or 14 percent.
CFO Jenn LaClair told Automotive News that Ally's credit application flow through dealers surged 11 percent from a year earlier to a third-quarter record of 3.2 million. Ally's dealer relationships, which sit at 18,000 franchised and used dealerships, have grown for 22 consecutive quarters, LaClair added.
"As you continue to grow both the quantity and the quality of those relationships, you can continue to see really strong flows," LaClair said.
Still, there's room for improvement. The company, which has longstanding ties to GM and Fiat Chrysler Automobiles dealers, is looking for growth with other brands, which generated $1.2 billion in auto loans for Ally in the last quarter, a 20 percent jump from a year earlier.
Meanwhile, Wells Fargo's auto portfolio benefited significantly from year-over-year comparisons, according to Executive Vice President Laura Schupbach, who is head of Wells Fargo Auto.
"Last year, we were still on a downward trajectory. We started to grow again in the second quarter of this year," Schupbach said.
The lender dialed back auto loan originations during a major restructuring that began in 2016. It ceded market share to focus on operational inefficiencies and dealership relationships. The changes involved consolidating 57 business offices across the country into four regional hubs. But the lender is quickly recuperating.
In the third quarter, auto volume grew, about 1 percent, as originations outpaced consumer pay-downs — meaning the company grew its portfolio at a faster rate than consumers paid off their loans. This happened last quarter for the first time since the third quarter of 2016.
Schupbach said there were no set goals for when Wells Fargo's growth will stabilize.
"We're always recalibrating to make sure that we're operating within Wells Fargo's risk appetite. We're able to make sure that customers are getting loans they can afford, and it's not detrimental to them financially. So we don't talk in terms of, here is our dollar amount, here is a goal we're going for," Schupbach said. "What we're really focused on is improving the business and the way that we interact with dealers and customers. And as we do that, the volumes will come."