2018 Ram Power Wagon
If Fiat Chrysler Automobiles is successful in its endeavors to form an internal captive arm, it would be a boon to the OEMs car sales, Dan Fields, president of Fields Automotive Group, told Auto Finance News.
In late May, FCA announced its intentions to form a captive arm and possibly buy the Chrysler Capital portfolio from Santander Consumer USA to jump-start those efforts, AFN previously reported. Fields said that OEMs at his dealerships “have had an inherent advantage” because of their captive finance arms.
“Even the ones that have very good partnerships with quasi-captives — which are really banks with a name in front of it — are just not the same as a true captive that will make a sacrifice for the greater good of the company,” he said. “With the bank, there’s more of a rational decisioning, and sometimes in the automotive business the emotional decisions are the right ones.”
However, it’s not so clear the move will be net positive for Stone Mountain, Georgia-based Gwinnett Chrysler Dodge Jeep Ram. Finance Manager Michael Haywood hopes this new captive will buy in the same credit buckets that Santander does now, but they are primarily in the dark right now.
“We have no idea because we have such limited information about what kind of bank program they will be because Santander buys all over the credit spectrum,” Haywood said. “I would assume they would buy similar to what Santander does now, but there’s no way to tell — it could affect us greatly or it might not affect us at all.”
Haywood is currently happy with Santander’s program, he added, noting that roughly 60% of the dealership’s originations go to the financial institution, which can accommodate credit scores from 500 – 850.
While FCA figures out its next moves, dealerships are more immediately concerned about the rising rate environment and are turning to credit unions that can offer the lowest rates, both dealers noted.