Santander Consumer USA has terminated more than 800 dealerships since 2015, based on “performance-related issues,” leaving the lender with more than 15,000 dealership customers nationwide, the company said last week.
“We believe there’s a direct connection between strong consumer practices, a culture of compliance and the creation of shareholder value,” CEO Jason Kulas said in a conference call April 26.
“Simply stated, the companies that embrace and execute on these concepts will be more successful than those who do not,” he said. Santander Consumer did not respond to a question asking how many of the 800 are Fiat Chrysler dealerships.
Santander Consumer and FCA US launched Chrysler Capital in 2013, under which Santander Consumer provides retail loans, leases, dealer floorplan and commercial loans for dealers under the Chrysler Capital brand. The private-label arrangement makes Santander Consumer the closest thing FCA has to a captive finance company.
Kulas said that Santander Consumer, in releasing its first-quarter results, also was providing more detail about its dealer performance management system “in response to several investor inquiries” regarding dealer performance, and also recent settlements Santander Consumer reached with regulators in Massachusetts and Delaware.
In March, Santander Consumer agreed to pay $25.9 million to resolve investigations by the attorneys general in those two states into its financing and securitization of subprime auto loans.
Santander Consumer said last week that starting in 2013, it monitored dealer performance quarterly, based on quantitative metrics such as loss performance vs. expectations. In 2014, it created a monthly dealer performance management process.
The process applies to all dealerships, not just FCA stores, the company said. In 2015, it created a separate Dealer Services department, responsible for dealer oversight and management.
Last year, Santander added “qualitative” metrics, including negative publicity, false documents and consumer complaints, the company said.
Besides weeding out underperforming dealers, Santander Consumer said it also is trying to reward FCA dealers who meet the dealer performance management standards.
The lender now has more than 2,000 FCA dealerships participating in its VIP Program, which was launched in 2016. In February, the company said about 1,000 dealerships had qualified for the program.
Dealers are rewarded with “various levels of payout” for growth in new-vehicle volume for FCA, plus “highly competitive incentives” for floorplan dealers, the company said. As of Jan. 1, FCA had 2,440 U.S. dealerships, according to the Automotive News Data Center.