The split between Mercedes-Benz Financial and Chrysler Financial isn't likely to affect dealers much in the short term.
But the divorce leaves Chrysler Financial facing some longer term uncertainties:
- Cost of funds. The merged DaimlerChrysler Financial had a higher credit rating than the new Chrysler Financial. That could make it more expensive for Chrysler Financial to borrow money.
- A narrow footprint. As it was before the DaimlerChrysler merger, the new Chrysler Financial is almost entirely dependent on the ups and downs of the North American auto market. The divorce also makes the new Daimler Financial Services more dependent on Europe. But Daimler Financial is more diversified, including heavy-truck finance, and more nonautomotive business.
- Relationship with GMAC. Cerberus Capital Management LP now owns Chrysler Financial and a majority share in GMAC Financial Services, GM's captive finance company. Does Cerberus really need two stand-alone captives?
Mark Manzo, Chrysler Financial vice president of sales and marketing, said in a phone interview last month that there is no discussion about merging the two captives. Chrysler Financial is focusing on its day-to-day business and the task of splitting up the formerly merged DaimlerChrysler finance companies, especially on the information technology side, he said.
In light of the breakup, Chrysler Financial also is reviewing its international strategy, he added. Safe to say, Chrysler Financial will pursue more business in Latin America, Manzo said. Before taking his current position in July, Manzo was president of DaimlerChrysler Financial Services Latin America.