Some auto lenders are choosing not to chase volume. Consumer Portfolio Services and PNC Bank are consciously passing up volume to protect profits and their credit standards. Wells Fargo made a similar statement this month.
“We’re not, we never have been, and never will be, the people that chase the crowd,” Charles Bradley, CEO of subprime lender Consumer Portfolio Services, said during the company’s first quarter earnings conference call last week.
While Consumer Portfolio’s originations in the first quarter were up 23 percent year over year, to $234 million, that total was down 12 percent from the fourth quarter of 2014. It would have been more typical for originations to increase from the fourth quarter to the first quarter.
In the conference call, Bradley said Consumer Portfolio would stick to consistent lending standards even if it means passing up volume. He cited Wells Fargo’s use of that strategy as well. “We do what they do,” Bradley said in explaining the tactic.
Wells Fargo said in a conference call this month that “continued risk and pricing discipline in a competitive market” had contributed to the bank’s decline in auto originations for the past two quarters.
‘Purposely’ losing share
PNC Bank said last week it was losing share in auto finance by design.
“We’ve seen inside of the retail space, particularly in auto, decline year on year as we have kind of held to our standards, and we have seen others extend [loan] maturities and drop FICO” score thresholds, said William Demchak, chairman of PNC Financial Services Group, of Pittsburgh.
The bank’s total auto loans were $11.1 billion as of March 31, up year over year from $10.9 billion but down from $11.6 billion as of Dec. 31.
Demchack said that industrywide a high percentage of auto loans are subprime but that PNC does not “play in that space.”
“So we’re losing share in auto purposely,” he said.
You can reach Jim Henry at email@example.com