TD Auto Finance sheds stores, eschews subprime

“I don't think you can be all things to all people,” CEO says

Stuart: "If I do one contract every two months with somebody, why should they get the same offer as somebody who sends me 200 a month?"

TD Auto Finance has shed about 2,800 dealerships this year in its campaign to cut low-volume stores and concentrate on dealerships that send the most business, according to Andrew Stuart, head of the company’s U.S. business.

Many of the dealerships cut were independent, used-car stores, he said Tuesday during a question-and-answer session at the Auto Finance Summit in Las Vegas. He said the company still provides financing to around 350 used-car dealerships.

For the fiscal third quarter that ended July 31, TD Auto Finance had outstanding auto loans in the United States of $15.9 billion, up from $15.3 billion a year earlier. TD Bank of Toronto bought the company, then Chrysler Financial, from Cerberus Capital Management in April 2011.

Stuart joined TD Auto Finance in July, after leaving the CEO post at VW Credit Inc. After his conference presentation yesterday, Stuart discussed TD Auto Finance’s business progress with Automotive News Special Correspondent Jim Henry.

How are your numbers?

Our originations have been increasing and our market share has been increasing.

Are you adding new segments, such as subprime? Hasn’t the bank been postponing subprime?

I will tell you quite honestly, subprime isn’t on my radar. I don’t think you can be all things to all people.


What about the trend to longer terms? Other lenders say they offer 75 months but no longer, or they offer longer loans but don’t incentivize them. Do you even offer 84-month terms?

Since we’re not a captive, we don’t get incentives. Our most recent average term is around 66 months. We do offer an 84-month product, but we limit it to 680 FICO and above.

How about leasing?

We do not offer leases. We had a legacy lease portfolio that is just about all run off. As a bank it’s not our strength. Our collective view is we should leave that business to the captives.

TD Auto Finance trimmed its network of U.S. dealerships this year. What’s your store count now?

In August, we had 6,930 who were doing business with us; in September, 6,869. Call it around 6,900.

Wasn’t it pushing 10,000?

There were about 9,700 for the full year of 2013. But as I say, our originations have actually been growing.

Can you speak in general terms about the dealerships you’ve cut?

It’s the amount of business. If I do one contract every two months with somebody, why should they get the same offer as somebody who sends me 200 a month?

Does that mean your top-tier dealers get some sort of priority service?

We are looking at a diversified level of service and rewards. This has been growing throughout the year. It’s something we can offer as a bank -- the opportunity for us to manage their [dealers’] business accounts, things like that the captives can’t provide.

Is it like Capital One’s “Diamond Dealers,” where they get better service but not necessarily better rates? Or is it like Ally’s “Dealer Rewards,” where the dealers who get all their tickets punched -- floorplan, sales penetration, product sales, etc. -- actually get a better financial deal, better money?

We call it Priority Dealer. The program was launched earlier this year. No, it’s not about getting better rates.

You can reach Jim Henry at autonews@crain.com

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