The merger of Daimler-Benz InterServices (debis) and Chrysler Financial Corp. makes Chrysler Financial part of a larger concern that is more diversified, less strictly automotive and far more international.
The new parent is DaimlerChrysler Services (debis) AG. Headquarters are in Berlin, Germany's financial capital - not Stuttgart.
The new company says it is the fourth-largest nonbank provider of global financial services, after GE Capital Corp., Ford Motor Credit Co. and General Motors Acceptance Corp.
And DaimlerChrysler Services could someday overtake GMAC, through internal growth and/or by acquisitions, said Chairman Klaus Mangold. Mangold spoke with reporters in a Jan. 20 conference call, when the merger of the two financial companies was announced.
'I believe we have the potential to be much closer now to No. 3 than ever before,' he said. The new company said it had a worldwide lending portfolio of $68.8 billion in 1997, adding in Chrysler Financial. That compares with $105 billion for GMAC in 1997, the company said. By itself, Chrysler Financial was less than half the size of GMAC.
'If we see opportunities for acquisitions, where they make sense, and where they meet our targets for return on equity, we will do it,' Mangold said.
He said he expects growth in three major areas:
Expanding the traditional, automotive segment.
Reaching new, worldwide markets.
Diversifying even more into nonautomotive finance.
More than cars
The new parent has more nonautomotive business than the old Chrysler Financial, and there are plans to grow the nonauto portfolio even more.
'We want to move forward very fast in developing nonautomotive business in the United States and as well in NAFTA, in areas like aircraft, ships, ferries, machinery and so on. This is a world of much more opportunities in the future,' Mangold said. NAFTA, the North American Free Trade Association, includes Canada, Mexico and the United States.
Nonautomotive activities will be integrated in a new Capital Services unit, based in Berlin and in Norwalk, Conn. This new unit will be run by William Bishop, former CEO of Chrysler Capital Co. He will report to Mangold.
The former Chrysler Financial had 21.3 percent of its finance receivables in nonautomotive business as of September 1998.
The new DaimlerChrysler Services has three major business areas. The former Chrysler Financial now belongs to the Financial Services division. The other two business areas are Telecom Services and IT Services (IT stands for information technology). Telecom and IT Services accounted for 30 percent of pro forma 1998 revenues.
Nevertheless, the former Chrysler Financial and the U.S. market continue to occupy a prominent place in the new scheme of things. The United States was the biggest single market for the combined financial company, based on pro forma 1998 results - slightly bigger than Germany itself, which accounted for 38 percent of revenues.
Before the merger, 83 percent of Chrysler Financial's 1998 revenue came from the United States, and virtually all the rest from within North America. The new parent said the United States would have accounted for only 39 percent of its revenues in 1998 - and that includes the portfolio of the former Mercedes-Benz Credit Corp., based in Norwalk.
Spreading risk over a bigger geographic area is an obvious benefit of the DaimlerChrysler merger.
And the former Chrysler Financial will more than carry its weight in earnings. The former Chrysler captive had an operating profit of $518 million through the first three quarters of 1998. That would have been 61.6 percent of operating earnings for the combined companies for the same period, according to DaimlerChrysler Services. Operating profit is profit before taxes or one-time charges.
'Financial Services are a cornerstone of our vision to become the most successful automotive brand and service provider in the world, as well as providing additional profit to the bottom line,' Mangold said. 'It is one of the most important contributors to profits within our group.'
Jim Henry is a New York-based staff reporter for Automotive News.