Ally warns of economic damage from COVID-19
Ally Financial has warned that the longer the COVID-19 pandemic lasts, the more its economic fallout could hurt the auto lender’s business on many fronts – retail customers, dealer customers, employees, third-party service providers, credit markets and the economy. American in general.
“The duration and severity of the pandemic remains impossible to predict,” Ally said in a Security Exchange Commission filing on April 6.
The lender has withdrawn its previous outlook for financial results for 2020 because the COVID-19 situation is so volatile and unpredictable.
In that initial outlook, released in January, Ally said its adjusted total net income for 2020 would rise 6% to 9%, above actual results of $ 6.3 billion in 2019.
Ally is not alone. For example, Toyota Motor Credit has warned that the pandemic is seriously affecting its operations in the United States.
“These events have disrupted the supply chains of the vehicles we finance, caused a decline in vehicle sales and our financing and insurance products, and could ultimately have a material adverse effect on vehicle sales. and our financing and insurance products, ”the company said.
In separate filings with the SEC, Ally and Toyota Motor Credit cite potentially higher financial risks associated with the pandemic-related loan deferral programs they offer to both retailers and dealers.
As of March, Ally has been offering payment deferrals of up to 120 days for retail customers and some wholesale accounts.
“These programs can have a negative impact on our revenues and other short-term operating results and, if they are not effective in mitigating the effect of COVID-19 on our customers, can negatively affect our business and our operating results more substantially over a longer period of time, ”said Ally.