Chrysler Capital on track to hit first-year volume target

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Chrysler Capital, the private-label preferred finance company for Chrysler Group, is on track to hit a first-year volume target May 1 that will enable it to renew its 10-year agreement with Chrysler.

The target was disclosed in an annual report filed this month by Santander Consumer USA, which partnered with Chrysler Group to launch Chrysler Capital on May 1, 2013.

Chrysler Capital offers prime and subprime auto loans and leases for Chrysler, Dodge, Fiat, Jeep and Ram truck dealerships, plus wholesale financing for dealers. Santander Consumer USA replaced Chrysler’s former preferred lender, Ally Financial.

Chrysler Group could cancel its current agreement if Santander Consumer USA fails to hit targets for its share of total Chrysler volume, according to the Santander report. Santander Consumer USA is majority-owned by Banco Santander of Spain.

From May 1, 2013, to Dec. 31, 2013, Santander Consumer USA originated over $7.5 billion in Chrysler Capital auto loans and over $2.4 billion in Chrysler Capital leases, the report said. Those numbers represented a penetration rate of 26.4 percent of Chrysler’s total volume for the period. Chrysler Capital’s target for the first year of the agreement is 31 percent, according to the report. In years two through five, the target increases from 44 percent to 65 percent, the report said.

In turn, Chrysler Capital is entitled to limited exclusivity on Chrysler Group incentives, including loan and lease incentives, the report said.

Since launching Chrysler Capital, Santander Consumer USA’s mix has gone from an average of 14 percent prime-risk loans for all of 2012 to 30 percent prime-risk loans for the last eight months of 2013. Overall, Santander Consumer USA more than doubled its auto loan and lease originations in 2013 to about $19 billion, the report said.

Alongside its Chrysler Capital business, Santander Consumer USA offers primarily near-prime and subprime auto loans via dealerships and directly to consumers online.

About 95 percent of the 14,000 dealerships that do business with Santander Consumer USA are franchised, new-vehicle dealerships; the rest are used-car stores, the company said.

You can reach Jim Henry at autonews@crain.com.

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