Ally Financial Inc, one of the major US auto lenders, reported a net income of $796 million. This is more than double the $374 million the company earned in the first quarter of 2019. As a result, Wednesday afternoon trading saw Ally Financial shares trading at $50.22.
In the first quarter of 2020, the company lost $319 million because of the pandemic. This means its revenue is up by more than $1 billion year-over-year. However, Ally Financial originated $10.2 billion in auto financing alone for the first three months of 2021 – the highest volume in the past five years.
Auto originations jumped up by 12% since the last quarter of 2020, sourced from almost 3.3 million applications. Used vehicle originations reached $5.7 billion, while new vehicles contributed $3.1 billion. The lender also derived $1.4 billion in leases.
Jeffrey Brown, the CEO of Ally Financial, said: “Overall demand for new and used vehicles was robust during the quarter, while competition remains balanced but intense.” He also added: “Industry inventory levels reached multi-decade lows, as sales trends were strong and we began to see the early impact of constrained OEM production due to chip-related shortages.”
Ally’s car insurance written premiums totaled $333 million. The company’s budget also received a boost in the form of $22 million previously planned for credit loss coverage.
Both COVID-19 and factory closures had a significant impact on the whole industry. Ally was also affected by the trucking shortage and weather conditions, as Brown also said that it was “pretty amazing how some of these kinks in the supply chains can really further disrupt[…] I suspect we’re at or around the bottom on floorplan, but I don’t see balances really meaningfully rising until probably the back half of this year at best.”