Ally Financial Inc, a major US auto lender, reported net income of $796 million. That’s 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 due to the pandemic. That means its revenue has grown by more than $1 billion year over year. However, Ally Financial generated $10.2 billion in auto financing in the first three months of 2021 alone – the highest volume in the past five years.
Automobile creations have jumped 12% since the last quarter of 2020, coming from nearly 3.3 million applications. Used vehicle creations reached $5.7 billion, while new vehicles contributed $3.1 billion. The lender also secured $1.4 billion in leases.
Jeffrey Brown, CEO of Ally Financial, said:Overall demand for new and used vehicles was robust in the quarter, while competition remained balanced but intense.He also added: “Industry inventory levels hit multi-decade lows as sales trends were strong and we began to see the early impact of limited OEM production due to chip-related shortages.”
Ally auto insurance written premiums totaled $333 million. The company’s budget also received a boost in the form of $22 million previously earmarked for credit loss coverage.
COVID-19 and plant closures have had a significant impact on the entire industry. Ally was also affected by the truck shortage and the weather, as Brown also said he was “pretty amazing how some of these flaws in supply chains can really be more disruptive I suspect we’re at or around the bottom of the floor plan but I don’t see balances increasing significantly until probably the second half of this year at best.”