Chrysler expects leasing to climb
Santander venture will give dealers flexibility
Peter Grady, on matching the industry leasing rate: “We’ll get there. It won’t take that long.”
ORLANDO -- Chrysler Group expects dealers nearly to double the number of new vehicles they lease after Chrysler Capital, the group's new financial joint venture with Banco Santander SA, launches May 1.
Leasing accounts for only about 10 percent of Chrysler sales, well below the industry average of 18 percent, said Peter Grady, Chrysler's vice president of network development and fleet.
But he said Chrysler will stick to the industry average and not try to move slow-selling vehicles with leasing.
Grady said Santander's size and the low cost of funds means Chrysler Capital will be able to offer competitive subvented leases in more segments. The deal "gives us an opportunity to really get aggressive in some places where we currently don't play," he said here at the National Automobile Dealers Association convention.
For instance, Chrysler might offer more leases on midrange minivans or the redesigned Chrysler 200, due in 2014.
Chrysler is the only Detroit automaker without its own captive finance arm. The Chrysler Capital joint venture will use Chrysler's name but Santander's balance sheet to offer consumer financing, wholesale floorplanning, and real estate and commercial loans through Chrysler's network of 2,500 dealers, including Fiat dealers.
But the company won't rely on subvented leases to move vehicles that aren't selling.
"I don't know if we want to go beyond where the industry is leasing, to be honest. If you go too much into leasing, it can be a heavy [cost] because you always pay on the back end with too many off-lease vehicles in a particular segment," Grady said. "But I think we'll want to be at about that 18 percent, and I think we'll get there. It won't take that long."
Edmunds.com says the average lease penetration rate last year was 22 percent.
Chrysler Capital will replace Ally Financial Inc. on May 1 as Chrysler's preferred lender, although dealers will be free to work with whatever lenders they choose. Santander currently does consumer lending through many Chrysler dealers and will continue to do so under its own brand as well.
"I would expect every dealer to be sending retail business to Chrysler Capital immediately," Grady said. "There's no reason not to. As far as moving floorplans or things like that? That's a bigger, more time-consuming decision for dealers."
You can reach Larry P. Vellequette at email@example.com.