April 2024
Ally Financial increased its allowance for auto credit losses in the first quarter as delinquencies and net charge-offs rose on a year-over-year basis.?
Credit performance improved on a sequential basis but worsened when compared with a year ago, reflecting seasonal trends. The allowance for auto loan losses sat at a coverage ratio of 3.65% in Q1 2024, flat with Q4 2023 but up 5 basis points (bps) YoY, according to the bank’s earnings supplement.?
The rate of auto loans 30-plus days delinquent sat at 3.88% in Q1, down 54 bps) quarter over quarter but up 64 bps YoY, according to Ally’s earnings presentation. Sixty-plus day delinquencies ticked down 13 bps QoQ to 1.1%, an increase of 30 bps YoY. ?
The net charge-off rate climbed to 2.27%, increasing 6 bps QoQ and 59 bps YoY, in line with the bank’s expectations.?
Pricing competition has ramped up among dealerships as inventory returns to more normal levels and lenders’ appetite for auto loans increases. ?
For Ricart Automotive Group in Groveport, Ohio, many lenders are buying prime and superprime loans, but credit access remains limited in the lower credit segment, President Rick Ricart told Auto Finance News.?
“We’re starting to see some of the mid-players [lenders who make deals within the mid-level credit range] being more careful on their advances,” Ricart said. “So, it makes it tough for the consumers who have negative equity and don’t have a lot of money down to fit the parameters.” ?
In fact, negative equity trade-ins hit 20.4%, marking the highest level in two years, according to the latest data from Edmunds.?
Regional bank auto earnings posted little movement in the first quarter of 2024, extending similar trends seen from Bank of America, Chase Auto and Wells Fargo Auto.?
U.S. Bank’s auto originations tumbled 5.9% year over year to $1.6 billion in Q1, according to its earnings supplement released April 17. Origination volume increased 45.5% compared with Q4 2023.?
Pittsburgh-based PNC Financial logged a nearly flat auto portfolio in Q1 at $14.8 billion, down 0.5% QoQ and 0.9% YoY, according to the bank’s earnings supplement released April 16.
Citizens Bank continued to run off its auto portfolio following its exit from indirect auto lending, which landed at $7.3 billion, down 11.9% QoQ and 36.9% YoY, according to the bank’s earnings supplement released April 17.
The AFN?editorial team is calling on subscribers and 2024 Auto Finance Summit East attendees to help shape the discussion during Session 4 of the summit taking place May 2 at 1:30 p.m. ET at the Grand Hyatt Nashville Hotel in Nashville, Tenn.
AFN subscribers and summit attendees can contribute to the discussion by participating in a brief, six-question survey about expectations for the auto lending market for the remainder of 2024.
Survey responses will remain anonymous.