Too Few New Vehicles to Sell, Ally CEO Says

The biggest complaint from dealers nowadays is lack of new-vehicle inventory, says Jeff Brown, CEO of Ally Financial.

“From the smaller one-store dealers to the big groups like Rick Hendrick, Hendrick Automotive, their biggest challenge now is, they just need more cars,” Brown says in a conference call announcing Ally’s second-quarter results.

“We think new-car production should return,” he says. However, “when you talk to the dealer base, that’s the biggest challenge they’re facing more than anything, is a simple lack of inventory.”

Naturally, that has a big effect on Ally, a major auto lender. Ally’s consumer new-vehicle originations in the second quarter were $7.2 billion, down about 26% from $9.7 billion a year ago. Ally’s dealer floorplan assets in the second quarter were $20.2 billion, down about 30% from $29 billion a year ago.

With new-vehicle retail originations down, and with many consumers turning to used vehicles for value, Jennifer LaClair, Ally’s chief financial officer, says the company’s mix of used-vehicle originations hit a record 60% in the second quarter. That’s up from 54% a year ago.

Overall, Ally net income for the second quarter was $241 million, down 59% from a year ago but up from a net loss of $319 million in first-quarter 2020.