Ally Profit Warning Deepens Concern Over Slumping Used-Car Prices
- Supply glut, subprime losses may drag on earnings growth
- Car rental, dealer shares plunge following Ally’s forecast
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Ally Financial Inc. warned profit may grow less than anticipated only a few months ago, the latest sign that automakers’ heavy discounting and aggressive use of leasing to boost sales has created a supply glut hurting lenders and rental-car companies.
Earnings may increase as little as 5 percent this year, Ally said Tuesday, after Chief Executive Officer Jeffrey Brown in January predicted growth “shy of 15 percent but still very solid.” The caution raised by the Detroit-based company weighed on shares of rental companies and auto dealer groups including Hertz Global Holdings Inc. and AutoNation Inc.