NEW YORK -- An independent finance source is no substitute for a wholly owned captive finance company, U.S. auto chiefs say.
Panelists at an industry conference last week avoided naming names but left no doubt that GMAC Financial Service's virtual shutdown in late 2008 illustrated the need to have a totally dependable finance source.
"If you're in the automobile manufacturing business, you need an alliance with a finance company," said Mike Jackson, CEO of AutoNation Inc., the largest U.S. auto retail group, speaking at a forum sponsored by IHS Global Insight and the National Automobile Dealers Association.
For "everyone up here today, their finance company proved to be a strength" in the latest sales downturn, Jackson said, referring to fellow panelists from BMW, Honda, Toyota and Volkswagen. Ford Credit also got some approving remarks.
"Certain captives," which Jackson did not name, bailed out of the market, and some banks, he said, put a strict limit on the amount they would lend. Once a bank reached its quota, Jackson said, "The Lord Above could come in for a loan and He would be turned down."
Dealers also found themselves in the lurch on floorplan loans to support their inventories, said John Mendel, executive vice president of sales at American Honda Motor Co. He said Honda Financial Services took over floorplanning last year for 96 dealers who got "go away" letters, presumably from Chrysler and GM.