Ally Financial reported strong first quarter results for its Dealer Financial Services unit last week — about a year after the bank made a significant pivot to focus more on its automotive business.
In 2025, Ally Financial pivoted to reduce risk, sell off its credit card business, stop originating consumer mortgages and concentrate more closely on the automotive space and on Ally Bank, its consumer-facing, online bank.
“I think the pivots that we took a year or so ago have really set us up well for this environment,” Ally Financial CEO Michael Rhodes said during an April 17 earnings call.
For example, Ally, which serves about 21,000 dealers, increased its consumer auto finance originations in the first quarter versus a year ago, even though U.S. auto sales were down in Q1, the company said.
At the same time, Ally has refused to put volume ahead of profit, said CFO Russ Hutchinson. “We don't chase growth across our organization,” he said in the call. “As you can see from the results, this is a team that prioritizes credit and returns above growth.”
Ally net income attributable to common shareholders was $291 million in the first quarter, versus a $253 million loss in the first quarter of 2025. One-time items for “repositioning” and restructuring more than accounted for the year-ago loss.
Ally ended 2025 with 10,300 employees, according to its annual report for the year, having reduced headcount by around 400 positions compared to the previous year. Ally said the headcount reductions were mostly related to the sale of its credit card operations and ceasing consumer mortgage originations last year. A large number of those reductions occurred through two rounds of layoffs.
Meanwhile, Ally Dealer Financial Services has kept on ticking. That includes a record 4.4 million consumer credit applications in the first quarter, up about 16% from 3.8 million a year ago.
Consumer auto originations for Ally were $11.5 billion in the first quarter, an increase of 13% versus a year ago, even though auto sales for the industry overall were down in Q1 versus a year ago, Ally said.
Ally is encouraging its dealers to send Ally 100% of their credit applications. Ally refers applications that don’t fit Ally’s credit profile to other lenders, for which Ally pockets a fee.
In the first quarter, 41% of Ally originations were in its highest-quality risk category, which Ally calls its “S” tier, down from 44% a year ago.
Ally also reported its average FICO credit score for new-vehicle purchasers was 725; for used-vehicle purchasers it was 696. Both were down by just a few points, according to a financial supplement filed with Ally’s first-quarter report.
A 620 credit score is a commonly used cut-off for subprime credit. Originations below 620, including borrowers with no credit score, accounted for about 18% of the value of Ally auto originations in the first quarter, up from about 14% a year earlier.
But as noted above, CFO Hutchinson emphasized Ally doesn’t chase volume.
“We're really pleased with what the business was able to do in the first quarter in terms of growth,” he told analysts, shareholders and media listening to the earnings call. “I just want to assure you that there haven’t been any compromises made in terms of how we think about credit.”
