Lenders hold on to margins – for now

ORLANDO — Is increased competition forcing lenders to cut margins?

In interviews at the American Financial Services Association Vehicle Finance Conference here, lender executives acknowledged the pressure to cut margins, but most denied they're doing it. And they all denied lowering approval standards to chase more business.

Webb: "We are focused on gaining added efficiencies throughout our business to help offset the margin decrease." Photo credit: GREG COHEN

Here's what some said:

Elizabeth Webb, executive vice president and chief marketing officer, Exeter Finance Corp.: "Competition has affected margin for all lenders. We are focused on gaining added efficiencies throughout our business to help offset the margin decrease."

Dietmar Exler, vice president, Mercedes-Benz Financial Services USA: "We have already had strong competition for two years in the retail area. We will do our best to remain competitive on the whole area."

Michael McConnell, vice president of sales, marketing and corporate planning, Nissan Motor Acceptance Corp.: "As some competitors are coming back, competition is very robust. Subprime is very robust. … Especially as a captive, that actually takes some pressure off. You don't have dealers telling you 'Buy deeper! Buy deeper!' because the competition is filling that role."

Brian Switalski, president, Southern Auto Finance Co.: "We are feeling pressure on our margins. We are trying to hold off responding to that because we are such a niche player we don't feel the full flux of the competition. But we definitely feel it out there. We are not changing our credit quality, buying deeper or anything like that, and we don't really see that happening in the industry."

McConnell; "You don't have dealers telling you 'Buy deeper! Buy deeper!' because the competition is filling that role."

Christian Dahlheim, CFO, VW Credit Inc.: "There is margin pressure, for sure. I can clearly tell you we are not giving up margin in general pricing. But we might chip in something if the automotive company puts an incentive on a specific model at a specific time -- like the Jetta is slow in July, as a made-up example -- as a way to help the automotive company. But we do not do it for ourselves, to keep our share."

Karen Faust O'Rourke contributed to this report