The July merger of financial giants J.P. Morgan Chase and Co. and Bank One Corp. joined the nation's third-largest auto retail lender with the leading provider of commercial banking services to dealers.
The wave of bank mergers in recent years has led to complaints of poorer customer service. But some dealers say the combined auto-related operations of Chase and Bank One - called Chase Automotive Finance, the same name used by Chase before the merger - have improved rates and efficiency.
"Since they merged, they have saved me about a quarter-point in interest charges on floorplan and retail contracts," says Randall Noe, dealer principal of the Randall Noe Auto Group in a suburb of Dallas.
Before the merger, Noe says, his company had an $80 million annual floorplan account with Bank One. It also sent many retail contracts to Chase.
"We have a lot of industry expertise," says Norman Buchan, president of Chase Automotive Finance. Buchan has headed Chase's automotive services since 1997.
"Our executives know something about cars in addition to their respective businesses."
Chase had the largest number of outstanding retail vehicle loans and leases of any bank prior to the merger. It trailed only General Motors Acceptance Corp. and Ford Motor Credit Co. in terms of the number of outstanding contracts for new-vehicle loans and leases in 2003.
It had 6.2 percent of that market in 2003. Combined, Chase and Bank One had about 7 percent of that market last year, compared with 10.7 percent for GMAC, the No. 1 auto lender.
Norman Buchan: "We have a lot of industry expertise."
Bill Ruffin: "a complete package of commercial banking and investment banking services"
The combined operation has a retail portfolio of $67 billion in outstanding auto loans and leases issued through 16,000 dealers. It provides floorplan accounts to 1,000 dealerships.
Bank One has had a strong presence in the nonprime market, making loans to consumers with credit problems. Chase primarily has served retail customers who were better credit risks. The new entity will lend to a broader customer base, executives say.
Bank One has offered retail loan terms of 72 months and 84 months. Those loan lengths now will be available to Chase customers.
Chase has been an innovator in technology and electronic contracting. Bank One has just started to offer electronic contracts.
Chase also provides investment banking services to dealers. The company has banking relationships with many of the largest dealership groups in the country.
"We offer a complete package of commercial banking and investment banking services," says Bill Ruffin, Chase Automotive Finance's senior vice president in charge of dealer commercial services.
Dick Swope, president of the Swope Automotive Group in Louisville, Ky., has provided retail loans through Chase. He has financed inventory for his 19 dealerships through Bank One.
Says Swope: "This is a merger made in heaven."