Ally Warns of COVID-19 Economic Fallout

Ally Financial warned that the longer the COVID-19 pandemic lasts, the worse its economic fallout could hurt the automotive lender’s business on many fronts – retail customers, dealer customers, employees, third-party service providers, credit markets and the U.S. economy in general.

“The duration and severity of the pandemic continue to be impossible to predict,” Ally said in a Security Exchange Commission filing on April 6.

The lender withdrew its previous 2020 financial-results outlook, because the COVID-19 situation is so volatile and unpredictable.

In that initial outlook, issued in January, Ally said its 2020 adjusted total net revenue would increase 6% to 9%, above actual results of $6.3 billion in 2019.

Ally isn’t alone. For example, Toyota Motor Credit warned that the pandemic is seriously affecting its U.S. business.

“These events have disrupted the supply chains of the vehicles we finance, have caused a decline in the sale of vehicles and our financing and insurance products, and could ultimately have a material adverse effect on the sale of vehicles and our financing and insurance products,” the corporation said.

In separate SEC filings, Ally and Toyota Motor Credit cite potentially higher financial risks from pandemic-relate loan-deferral programs they offer both to retail and dealer customers.

Since March, Ally has offered payment deferrals of up to 120 days for retail customers and for certain wholesale dealer accounts.

“These programs may negatively impact our revenue and other results of operations in the near term and, if not effective in mitigating the effect of COVID-19 on our customers, may adversely affect our business and results of operations more substantially over a longer period of time,” Ally said.