The subprime lender could lose a big partner now that Fiat Chrysler has officially announced it will form its own auto finance unit, and the two are negotiating an end to their 6-year-old relationship.
Monthly repayment rates, a key credit metric, are improving, but Ally Financial's second dealer inventory financing transaction of the year includes fewer dealers from its highest-ranked internal credit tier.
The Detroit company recorded an 11% increase in car loans and leases originated during the fourth quarter, as well as a jump in yields. Ally appears to be benefiting from Wells Fargo's substantial retrenchment in auto lending.
A $3.8 billion surge in deposits in the third quarter will allow the subprime lender more flexibility to fund originations on balance sheet, rather than bundling these assets into collateral for bonds.
The hurricanes destroyed hundreds of thousands of cars, and banks are significantly boosting their reserves in anticipation of higher defaults on auto loans. But there is also a silver lining for auto lenders.