Ally to take over Mitsubishi's U.S. lending arm
Mitsubishi Motors Corp. is getting out of the U.S. auto lending business.
Mitsubishi, one of the smallest car companies with a captive finance arm in the United States, said today that it is selling its book of business to Ally Financial Inc., the former lending division of General Motors, which has become one of the nation’s largest auto lenders since being spun off during GM’s bankruptcy.
“We are pleased to have a financial partner like Ally that can support us with the products and services that our dealers need,” Don Swearingen, executive vice president of Mitsubishi’s U.S. sales division, said in a statement today.
Ally and Mitsubishi did not disclose the terms of the deal. In an email, a Mitsubishi spokesman confirmed that it was a sale. He declined to disclose the price.
Under the agreement, Ally will become Mitsubishi’s preferred retail and wholesale lender, replacing Mitsubishi Motors Credit of America Inc., which was formed in 1991. One of Ally’s main responsibilities will be to supply Mitsubishi’s roughly 380 U.S. dealers with floorplan loans to buy cars for showroom inventory and with capital loans to buy land for an expansion or to remodel a store.
Mitsubishi briefed about 30 dealers on the transaction Friday. Dealers in attendance told Automotive News that Mitsubishi’s lending arm plans to stop issuing new-car loans at the end of May and transfer its wholesale business to Ally in June.
“I think Ally is going to provide Mitsubishi with some really good wholesale programs,” said Scott Grove, a Mitsubishi dealer with two stores near Chicago who attended the meeting. Such programs were “just OK” under Mitsubishi, he said, but “there’s a capacity and appetite with Ally.”
Dan Booth, the CFO of Mitsubishi Motors North America, had been interim president of the lending arm since the departure of President Jeff Young last fall. He will remain with Mitsubishi as CFO.
Paul James and Diane Cutillo, two senior executives at Mitsubishi’s finance company, will move to Mitsubishi Motors North America to manage the automaker’s relationship with Ally. Under the terms of the agreement, Ally will offer jobs to all other MMCA employees supporting the auto business.
Mitsubishi, which sold 77,643 cars in the United States in 2014, was among the smallest car brands with its own U.S. captive finance arm. Many smaller automakers have contracted with banking giants to lower their capital costs. Jaguar, Land Rover, Mazda and Subaru, for instance, have agreements with JPMorgan Chase and Co.
"To me, Ally has more strengths,” said Ryan Gremore, the chairman of Mitsubishi’s U.S. dealer council and the general manager of a Mitsubishi dealership in Normal, Ill., the home of the automaker’s only U.S. assembly plant. “Mitsubishi is in the car business. Ally is in the lending business.”
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