Ally Financial (ALLY.US) stock plunges 18% as auto loan situation deteriorates

Ally Financial (ALLY.US) fell 17.62% to $32.67 on Tuesday, its biggest one-day drop since March 2020, after CFO Russ Hutchinson said the auto lender's borrowers were deteriorating. Hutchinson said borrowers showed financial vulnerability during 2024 and the US August employment report further highlighted these pressures. "We saw our credit challenges intensify throughout the quarter. Our borrowers are struggling with high inflation and living costs, and the recent employment softness," Hutchinson said at a conference. The company raised its expectations for losses on bad loans in 2024 in mid-July. Hutchinson said Ally would review its loan loss provisions and raise them as needed to account for potential defaults. He added that delinquencies and net charge-offs on auto loans in July and August were higher than expected. He said the company's future focus would be on capital and spending, though current guidance would remain unchanged.