Ally Financial says it expects used-vehicle prices to fall about 15% from today’s near-record highs by the end of 2023, but the company adds that so far in early 2022, there’s no sign of a significant decline, so potentially there’s upside to the forecast.
“Used-car prices, we see them within our financial trends as moderating,” Ally CEO Jeffrey Brown says in a Jan. 21 conference call to announce fourth-quarter earnings. “But if you look at the environment, used-car prices are still very strong. Our outlook this year is a really robust used-car market.”
In a separate forecast earlier this month, Cox Automotive says it expects the Manheim Used Vehicle Value Index to decline just 3% by the end of 2022 vs. 2021.
For its key auto finance segment, Ally reports pre-tax income of $839 million for the quarter, an increase of 49% vs. a year ago. U.S. consumer auto loan and lease originations, including new and used, were $10.9 billion in the fourth quarter, up 19.8% vs. a year ago.
Used-vehicle originations accounted for 64% of Ally’s fourth-quarter U.S. consumer auto originations, up from 51% a year ago.
Ally ends the fourth quarter with 21,076 active dealership relationships, up 12.6% vs. a year ago. That’s the 12th year in a row the number of dealership relationships has increased, the bank says.
For full-year 2021, auto originations were $46.3 billion, up 31.9% vs. 2020. For the near future, Ally’s guidance is for the annual rate for auto originations to continue in the range of low $40 billions, Brown says.
“We’re large. We’re fast. Dealers like us,” he says. “We respond very quickly.” Ally says auto-decisioning accounts for 70% of its approved credit applications in auto and related insurance in 2021.
For all Ally Financial business segments, including auto finance and insurance, online banking, brokerage and wealth management, mortgages and credit cards, fourth-quarter net income attributable to common shareholders was $624 million, down 9.2%.
For full-year 2021, Ally net income attributable to common shareholders was $3 billion, almost triple 2020.