DETROIT -- After Fiat Chrysler Automobiles made clear that it wants a captive finance arm, could Chase Auto be raising its hand?
In a meeting with Automotive News, Chase executive Jagdeep Dayal said Chase Auto already is a captive, operating as well or better than automakers' in-house finance arms. On a visit to Detroit, Dayal, who works in New York, stayed at a hotel just five miles from FCA's suburban Detroit U.S. headquarters.
Chase Auto functions like a captive through private-label partnerships with Subaru, Mazda, Jaguar Land Rover and Maserati. "We call it private label, but really if you think about it, it is a captive business," Dayal, head of Chase's captive finance auto lending unit, told Automotive News.
Chase linked with Subaru first, in 2001. Mazda followed in 2008, Jaguar Land Rover in 2009 and Maserati in 2016. Each contract runs multiple years, with some brands into their third contract cycle, a Chase spokeswoman said. Through the partnerships, Chase has built four captive organizations, Dayal said. "It is truly a captive mindset. It's a captive culture. Each one is unique and distinctive in their own way."
On June 1, as part of FCA's five-year plan, the automaker said it plans to acquire a captive or build one from the ground up, after operating without one for nearly a decade. Santander Consumer USA has been FCA's de facto captive for five years, and it has another five years to go, under a 2013 agreement.
But Santander has fallen short of FCA market-share targets. It financed 28 percent of FCA's loan and lease originations in the first quarter, well shy of the 65 percent mark it targeted by the end of April, according to a filing with the Securities and Exchange Commission.
Santander and FCA are in talks about a potential buyout of Chrysler Capital, the private-label lending unit of Santander and FCA.
But Chase Auto could also be in the mix. Asked whether Chase was discussing a captive setup with FCA, Dayal said: "In my business, we are constantly talking to all the [automakers]. That's just part of what we do."
FCA declined to comment.
Over time, Dayal says Chase has built a true captive organization "to the extent that I believe that we are as successful if not more than any in-house [automaker] captive."
A typical captive originates 45 to 60 percent of its brand's loans and leases, Dayal said. Chase's private-label penetration falls into that category for each of its brands. What Dayal calls "best-in-breed" captives originate around 65 percent of their brands' loans and leases. For some of its brands, Dayal said, Chase is best in breed.
"This is an evolution. We have learned to become a top-notch captive over the years in everything we do," he said. "That, I think, is the strength we as Chase have. … We have developed how to behave and run a captive."