That won't have much immediate effect on Ally Financial Inc., Chrysler's preferred lender until this month, because subvented loans for Chrysler accounted for only about 2.1 percent of Ally's retail auto originations in the first quarter, down from 7.2 percent a year earlier.
"May 1 is the end of our agreement with Chrysler," said Ally President Bill Muir during a May 1 conference call for analysts. "Our understanding is that all of their advertised APR programs will be through Chrysler Capital."
Muir said he expects Chrysler low-APR deals to "go to zero pretty quickly" for Ally, but he said Ally will still be eligible to finance Chrysler loans carrying a cash incentive.
Separately, a Chrysler Group spokesman confirmed that customers who choose a cash rebate, when one is offered, can be financed through any lender. But if they choose a subvented-rate deal, he said, it must go through Chrysler Capital.
Overall, Ally is less dependent on incentivized deals from General Motors, too, although GM represents a bigger piece of Ally's volume than does Chrysler. In the first quarter, subvented deals from GM accounted for 13 percent of originations, down from 18 percent a year earlier.
Standard-rate loans for GM customers accounted for 15 percent of Ally's volume in the first quarter, on par with a year ago. Standard-rate loans for Chrysler Group customers were 10 percent of Ally's total, down from 11 percent.
Ally and GM are in the last stage of phasing out the exclusive nature of their agreement concerning incentives. The current agreement between Ally and GM expires at year end. However, the two partners expect to continue to do plenty of business together.
Meanwhile, Ally's lease penetration picked up in the first quarter to 28 percent, from 16 percent a year ago.
Ally CEO Michael Carpenter was asked during the conference call whether Ally would continue to ramp up leasing.
"I would characterize it as more of normalization than a ramping up," Carpenter said. "There was a period where we were lower than historical average on leasing. The mid-20s to 30 percent is probably where it's going to be in the near future."