Ally's Q2 US Auto Originations Climb to Second-Highest Amount in 5 Years

August 01, 2012

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NEW YORK — As U.S. originations rose to the second-highest quarterly amount in five years while subvented new-vehicle activity ticked up a bit, Ally Financial's vehicle lending division, North American Automotive Finance, watched its pre-tax income shoot up 13 percent year-over-year.

According to its second quarter financial statement revealed this morning, North American Automotive Finance, which includes results for the U.S. and Canada, reported pre-tax income of $631 million. That amount is up from the year-ago period when Ally posted $559 million

"This increase was primarily driven by strong financing revenue due to solid retail asset growth and a lower loan loss provision largely resulting from improved credit performance," Ally executives highlighted. "Pre-tax income also benefitted from lower noninterest expense."

Ally indicated its North American auto originations in the second quarter of 2012 came in at $11.7 billion, compared to $10.3 billion in the corresponding prior year period. The company said second-quarter origination levels were driven primarily by higher industry sales and growth in the used and diversified channels.

In the U.S., Q2 originations were $10.5 billion — the second highest quarterly amount since 2007 — compared to $9.5 billion in the second quarter of 2011. That total was comprised of $5.9 billion of new retail loans, $2.6 billion of used retail loans and $2.1 billion of leases.

U.S. used volume grew 20 percent compared to the corresponding prior year period, and U.S. diversified new originations increased 64 percent year-over-year. Combined, used and diversified new originations now account for 30 percent of total U.S consumer originations.

Ally noted that its subvented contracts associated with new-vehicle sales at both General Motors and Chrysler moved slightly higher in the second quarter.

For loans attached to GM vehicles, the Q2 subvented figure ticked up to $1.9 billion from $1.7 billion in the previous quarter and $1.4 billion in the year-ago period.

For contracts connected to Chrysler models, the Q2 subvented total moved up to $0.7 billion from $0.5 billion, the level the company generated both in the previous quarter and a year earlier.

Executives also highlighted the expanded number of diversified U.S. dealer relationships. The total grew 24 percent year-over-year during the second quarter.

Furthermore, Ally determined earning assets for North American Automotive Finance, which are on-balance sheet assets comprised primarily of consumer receivables, the consumer held-for-sale portfolio, leases and commercial receivables, totaled $104.1 billion, up 15 percent compared to the end of the second quarter of last year.

Consumer earning assets totaled $70.0 billion, up 21 percent year-over-year, "as strong originations continued to outpace asset run-off," according to Ally executives.

The company also pointed out commercial earning assets grew to $34.1 billion as of June 30 compared to $33.0 billion at the end of the comparable prior year period.

"The year-over-year increase was largely driven by higher dealer inventories to support growing auto industry sales," Ally concluded.

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