Editor's note: An earlier version of this story should have said Westlake Financial Services added about 5,000 stores in the past two years, bringing its total to about 18,000 dealerships nationwide.
Subprime specialist Westlake Financial Services’ continuing campaign to add dealerships and boost its prime-risk loan business is paying off.
The Los Angeles-based lender added about 5,000 stores in the past two years, bringing its total to about 18,000 dealerships nationwide. And nonsubprime business increased 10 percent from last year and is now about a third of its portfolio.
Westlake, a Hankey Group company, got its start in 1978 as the buy-here, pay-here division of Hankey Automotive Group. In 2011 Marubeni Corp., a giant trading company in Tokyo, bought a 20 percent share in Westlake in the form of stock valued at $250 million. Westlake currently has a total portfolio of around $1.75 billion in outstanding loans.
David Goff, director of marketing, discussed Westlake’s progress last week with Automotive News Special Correspondent Jim Henry.
A regional business magazine recently named Westlake one of the fastest-growing companies in Los Angeles County. Where’s the growth coming from?
We are up to around $1.75 billion. We’ve added almost 5,000 dealers. One thing we are doing -- we are already No. 1 in the independent dealer base, according to AutoCount data, more than any other -- what we really have been doing is showing a lot more push in the franchised market.
How many of your dealerships are franchised?
We have over 18,000 dealerships. Franchised is about 27 percent of our dealer base. We were at about 18 percent last year.
How do you go about it?
We have been doing a lot of dealer reach-outs, sort of focus groups for dealers. What is it they’re looking for? What can Westlake do for them? We took what they said and we made changes accordingly.
Is that how you got into prime-risk? What sort of feedback did you get?
We’ve actually offered prime for a long time. It’s more things like making it easier for them to use our system. Looking at pricing and how we’re advancing. We have also improved funding time. Based on the way deals come in-house, we have taken off almost half a day’s difference in funding vs. a year ago. We have also grown our rep base to reach more dealers. And we have a dealer support center to answer questions any time. There’s somebody that they can get in touch with right away.
Does your system provide automated loan decisions?
Our system is set up to give a response in less than a minute. It’s fully automated. That’s how Westlake started, with a fully automated program. Lots of companies say they’re fully automated, but you’re still waiting for a person to sign off on the back end. You can get a yes from us in less than a minute, assuming everything is entered correctly. Now, if you’ve said the customer is putting $4,000 down and they’re really only going to go $500, then there’s a problem with the deal structure.
You said funding is faster by half a day. How fast is it?
It’s less than two days. That’s a number for the average overall. But a good majority is in a day, a day and a half.
Where are the additional dealers coming from, prime or subprime?
We don’t sign up a dealer for just prime or just subprime. We have seen significant growth in nonsubprime. It’s about one-third of our portfolio now.
Where do you get your prime customers?
Our kind of customer is not going to walk into a franchise with a 720 FICO score, a pay stub and solid income. Every bank in the world would buy that deal. We are going to buy a 760, a 740, a 780 who is maybe having trouble proving their income or maybe they’re self-employed and they don’t have a regular pay stub. Or they have a bank statement but not income. A lot of banks won’t buy that guy. Or maybe they’re buying an older car with higher mileage. We’re going to buy that deal for that customer. We’re adding value by filling these niches. We’re filling holes for dealers."