Chrysler Capital will offer prime and subprime retail loans and leasing through Chrysler dealers, as well as floorplanning and construction loans to dealers. Chrysler said the arrangement will allow it to be more competitive, especially in terms of leasing, without placing added risk on its balance sheet.
Tom Dundon, 41, CEO of Santander Consumer USA, spoke on April 25 with Staff Reporter Larry P. Vellequette.
What does this deal mean for Santander Consumer USA in terms of your book of business?
We think we had built good processes, and it gives us the ability, in partnering with the manufacturer, to have a closer relationship with the dealers and use some of what we've learned over the years to hopefully be a little more precise in buying the prime and near-prime customer that the captives usually see. That's business that, unless you're a captive, you wouldn't have the opportunity to buy. With that opportunity, we think there's the ability to generate a good experience in the Chrysler dealer for the customer and hopefully generate some incremental sales.
How do you look at leasing risk?
The way we look at [leasing] risk is that this is a long-term agreement with Chrysler. There will be some good years and bad years with leasing. It's just like our history in the finance business, in that we've got to be there for the dealer. They've got to sell cars every day, and we think there will be some years where the residuals are high and some years where the residuals are low, but you won't know that for years in the future. As long as you stay in the business and support your dealers and your customers, we're willing to take that residual risk.
Will the creation of Chrysler Capital have any impact on Santander's relationships with non-Chrysler dealers?
It will have really no impact because it's a whole separate entity within the organization.
Will Chrysler Capital offer branded products, such as tire protection, extended-service contracts and other ancillary finance products?
Chrysler Capital plans on supporting and promoting Chrysler's line of Mopar-branded products.
Will Chrysler Capital operate just like a captive finance arm of Chrysler?
Yes. 100 percent.