In a year marked by record-breaking vehicle prices and a shifting automotive landscape, Ally Financial Inc. has emerged as a standout player, reporting robust third-quarter results for 2025. The company’s performance comes at a time when car buyers in the United States are facing historically high prices for new vehicles, with the average transaction price surpassing $50,000 for the first time ever in September, according to Kelley Blue Book (KBB).
Let’s start with the numbers that have caught the industry’s attention. In September 2025, the average transaction price for new vehicles in the U.S. climbed to an unprecedented $50,080. That’s not just a blip—it’s a 2.1 percent increase from the previous month and a 3.6 percent jump compared to September 2024. For many Americans, this milestone underscores the growing challenge of affording a new car. As KBB put it, the $20,000 vehicle is now “mostly extinct,” and price-sensitive buyers are increasingly turning to the used-car market or sitting on the sidelines altogether. Erin Keating, executive analyst at Cox Automotive, summed up the state of play: “Today’s auto market is being driven by wealthier households who have access to capital, good loan rates, and are propping up the higher end of the market.”
What’s fueling these steep prices? A big part of the story is the surge in electric vehicle (EV) sales. September saw EVs account for 11.6 percent of the total new vehicle market, up from 10.5 percent in the third quarter overall. The average transaction price for an EV reached $58,124, well above the already high average for all new cars. Many customers rushed to buy electric vehicles before the $7,500 federal tax incentive was phased out, further driving up demand—and prices.
Against this backdrop, Ally Financial Inc. delivered a strong third quarter, as detailed in its Q3 2025 earnings presentation released on October 17. The financial services giant, which has deep roots in auto finance, reported adjusted earnings per share of $1.15—a 166 percent leap from the same period last year and well ahead of analyst expectations of $1.00 per share. This news sent Ally’s stock up by 5.49 percent in pre-market trading, according to Investing.com.
The company’s adjusted net revenue hit $2.2 billion, marking a 3 percent year-over-year increase. Core pre-tax income soared 128 percent to $502 million, and the core return on tangible common equity (ROTCE) shot up 145 percent to 15.3 percent. These are eye-catching numbers, reflecting not just growth, but a rapid acceleration in profitability.
Ally’s auto finance segment, the heart of its business, showed particular strength. The segment generated $421 million in pre-tax income, with consumer originations totaling $11.7 billion. The retail auto originated yield stood at an impressive 9.7 percent, and the retail auto portfolio yield (excluding hedge) reached 9.21 percent in the third quarter. Notably, 42 percent of retail originations came from S-tier customers—those with the strongest credit profiles. During the quarter, Ally processed a staggering 4.0 million consumer applications, underscoring the ongoing demand for auto financing even as vehicle prices rise.
Ally’s capital position remains solid, with a Common Equity Tier 1 (CET1) ratio of 10.1 percent, up 30 basis points from a year ago. The company reported $4.5 billion in CET1 capital above the Federal Reserve Board’s requirement of 7.1 percent, providing a comfortable cushion for navigating any bumps in the road ahead. Asset quality metrics were stable, with a consolidated net charge-off rate of 1.88 percent and a retail auto net charge-off rate of 1.75 percent. Retail auto delinquencies reached 4.90 percent—a figure investors are keeping a close eye on, given the broader economic uncertainty.
Ally’s reach in the auto sector is impressive. The company maintains relationships with 7,000 dealers across the U.S. and Canada, sells an average of 2.2 finance and insurance (F&I) products per dealer in the U.S., and manages 4.0 million active F&I and property & casualty policies. Its corporate finance segment also posted solid results, with a 9 percent gross revenue yield and a 10 percent year-over-year growth in held-for-investment balances. Pre-tax income for this segment was $95 million, with 100 percent of the portfolio in first-lien positions and only 1 percent of loans on non-accrual status.
On the funding side, Ally boasts $142 billion in retail deposit balances, with 92 percent of deposits FDIC insured and 88 percent of the company’s funding coming from these deposits. This stable funding base has been a key advantage, especially as the company shifts its focus following the sale of its credit card business on April 1, 2025. This move has allowed Ally to concentrate on its core strengths in auto finance, insurance, and corporate finance—an approach that appears to be paying off handsomely.
Looking ahead, Ally has maintained its net interest margin (excluding original issue discount) outlook at 3.45 to 3.50 percent for the rest of 2025, with the fourth quarter expected to remain flat quarter-over-quarter. The company anticipates retail auto net charge-offs of about 2.0 percent and consolidated net charge-offs around 1.3 percent. Adjusted noninterest expense is expected to remain flat year-over-year, while average earning assets are projected to decrease by roughly 2 percent compared to last year. In a show of confidence, Ally announced a fourth quarter 2025 common dividend of $0.30 per share, signaling its ongoing commitment to returning value to shareholders.
Ally’s leadership is upbeat about the company’s trajectory. CEO Michael Rhodes stated, “We are pleased with our progress and even more confident in where we’re heading.” CFO Russell Hutchinson echoed this sentiment, adding, “We feel great about the progress we’ve made in capital over the course of this year.”
Still, challenges remain. The auto market is increasingly being shaped by wealthier buyers and the rapid adoption of electric vehicles, while macroeconomic uncertainties and rising delinquencies will test lenders’ resilience. For now, though, Ally’s strong Q3 performance and strategic focus on its core businesses have positioned it well to navigate the evolving landscape.
In a year defined by record vehicle prices and shifting consumer dynamics, Ally Financial’s results offer a snapshot of how financial discipline and market adaptation can deliver strong returns—even when the road ahead is anything but predictable.
