Stellantis buys subprime lender to set up financing arm
Stellantis will soon have its own financial arm after years of being the only major American automaker without a. Bloomberg reports that the company pays $ 285 million for First Investors Financial Services Group, a Houston-based auto lender.
The company will pay the $ 285 million to an investment group and the deal is expected to be completed by the end of the year. Stellantis CEO Carlos Tavares called the deal “an important step that will increase profits.”
“Direct ownership of a finance company in the United States is a white space opportunity that will allow Stellantis to provide our customers and dealers with a full range of financing options,” Tavares said in the statement Wednesday.
The move puts Stellantis the loan partnership with Santander is called into question. In 2013, just before Chrysler merged with Fiat to form FCA, Chrysler partnered with Santander Consumer to form Chrysler capital, which has since been the sole financial arm of the company. But when the merger was completed and FCA got a new CEO in Sergio Marchionne, he had other ideas for a loan branch. Of Automotive News:
Fiat Chrysler tried several years ago to pursue a different financial services strategy. Then-CEO Sergio Marchionne announced in June 2018 that the automaker intended to start a captive finance company either by acquiring Chrysler Capital or another company or by building one from scratch. The automaker abandoned that effort after Marchionne’s sudden death that year and chose to keep its deal with Santander.
From now on, Chrysler Capital will continue to operate and Santander says it will keep the conversations going on other opportunities beyond 2023.
Santander is known as one of the largest subprime lenders in the industry. Now, Stellantis is entering a partnership with First IInvestors Financial, a company that not only deals with subprime loans, but doesn’t exactly have a starr the story. We’ll see if the move leads to additional risky loans.