Aggressive loans pay off for Toyota Credit

Growing strong

Toyota Motor Credit is doing well by seeking more loan business.

Higher profits

Net profit, fiscal year ended Sept. 30: $71 million, up 51%

Bigger share

Captive share of Toyota and Lexus retail (excluding fleet) vehicle sales, combined for fiscal first half:

2001: 36.3%

2000: 31.6%


  • Buying "deeper," including higher-risk paper

  • Pursuing floorplan business

  • Increasing U.S. retail sales of Toyota and Lexus brands

  • Toyota Motor Credit Corp. is more aggressively buying retail loans and leases from Toyota and Lexus dealers and picking up share in floorplan loans on its way to record profits.

    The growth is partly by design and partly by default, since captive finance companies have gained market share as banks and other auto lenders have cut back or quit the business.

    Net profit for the quarter ended Sept. 30 was $21 million, 13 percent below the year-ago quarter due to an accounting change that reduced net profit.

    Except for the accounting change, net profit in the three-month period would have been a record $73 million, which puts the company on track for a record year, according to George Borst, CEO of the captive finance company.

    "We continue to improve our overall market share penetration of Toyota- and Lexus-financed sales to consumers as well as our penetration of wholesale financing," he said.

    Toyota Credit financed 36.3 percent of U.S. Lexus and Toyota retail volume for the fiscal first half, compared with 31.6 percent in the year-ago period, CFO John Stillo said.

    Despite the gain, that is still low for a captive finance company. For example, General Motors Acceptance Corp. reported that at the end of 2000, its share of new-vehicle retail business at GM dealers was "in excess of 40 percent," and its floorplan penetration was 72 percent. Those numbers can be tough to match because many import-brand dealers also have a relationship with a domestic captive.

    Toyota Credit has picked up share due to several factors, Stillo said.

    He said the captive adopted "tiered" pricing a year ago, which allows the company to buy higher-risk loans than had previously been the case. "That allowed us to segment our customers better," he said. Tiered pricing is another way of saying that like other auto lenders, Toyota charges higher-risk customers more.

    The Toyota captive also is gaining floorplan business, partly because so many banks and finance companies have dropped out of auto finance and partly because Toyota is more aggressive, Stillo said.

    "We are cementing relationships with dealers, he said. "They want to know you're in it for the long run."

    You can reach Jim Henry at

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