Ally Financial’s Automotive Net Charge-Offs Significantly Increased in 2022 Q4 Following Six Consecutive Quarters of Historically Low Levels

In 2022 Q4, net charge-offs exceeded 1.6% for the first time since 2017 Q4. Ally expects annualized net charge-offs will further increase to 2.2% by 2023 Q4. Covid era stimulus and the surge in used car prices in 2021 caused Ally and the automotive industry as a whole to experience historically low charge-offs. As used car prices have begun to fall in the second half of 2022, charge-offs have increased. The increase in charge-offs will likely continue into 2023 as vehicles purchased in 2021/2022 experience accelerated depreciation due to falling used vehicle prices.

Source: Ally Earnings Presentations