Santander said in a statement that there are several possibilities for the future of its relationship with FCA. Photo credit: BLOOMBERG
Fiat Chrysler Automobiles is considering establishing its own U.S. captive finance arm for the first time in nearly a decade, CEO Sergio Marchionne said Friday during FCA’s investor day in Balocco, Italy.
The captive, expected to be launched as early as 2019, could be formed from scratch or through an acquisition.
FCA currently leans on Santander Consumer USA Holdings Inc. and a patchwork of other banks to finance its vehicles. A captive could help the automaker become more competitive in the auto lending space and capture profits currently generated by such banks. It also could position Fiat Chrysler to better participate in the mobility, or transportation as a service, landscape, according to the company’s presentation.
The move could spell trouble for Santander, though reports out of the investor event cite Fiat Chrysler CFO Richard Palmer as saying the automaker is in talks to buy all or part of Santander Consumer.
The Dallas-based lender has backed Chrysler Capital since 2013 in a partnership forged on the promise of increasing leasing for dealers.
Five years into the 10-year financing agreement with FCA, nearly two-thirds of Santander auto loan originations were through Chrysler Capital, the private-label lending program of Santander and FCA, according to the Santander’s first-quarter report. Of the lender’s $6.3 billion in first-quarter auto originations, Chrysler Capital leases represented $2.1 billion, while Chrysler Capital loan originations accounted for $1.9 billion.
Santander said in a statement that there are several possibilities for the future of its relationship with FCA. “In the meantime, we remain focused on providing Chrysler dealers and customers with the same superior service they have come to expect.”