Ally Financial will stick with a strategy of raising rates and getting tougher on approvals in some auto-loan niches in 2017, sacrificing volume for higher margins, company executives said Tuesday.
CFO Chris Halmy said Ally pursued a similar strategy in 2016. He added Ally could also afford to raise rates this year in part because some other big banks have “run” from auto lending.
“For the first time in a while, we have seen competition improve,” Halmy said in a conference call for investors and analysts. “We have seen some banks really pull back from the market, which is typically what the big banks do.”
Halmy didn’t name any competitors, but Capital One, GM Financial, Santander Consumer USA and Wells Fargo all cut back on auto-loan growth in 2016 to varying degrees, especially at the low end of subprime.
Ally selectively pulled back, too. It reduced its auto-loan originations overall in 2016 vs. 2015, and made a smaller percentage of its auto loans at both ends of the credit spectrum.