Chase Auto CEO Mark O'Donovan says the lender's auto originations will decline after its private-label agreement with Mazda Motor of America Inc. ends in April 2020.
Mazda announced in August that it is switching to Toyota Financial Services as its partner for consumer auto loans and leasing, ending the more than 10-year agreement with Chase.
The true impact of the end of the Mazda agreement likely won't be felt until 2023, O'Donovan said. That's when the Mazda vehicles financed during the arrangement roll off the lender's balance sheet. Chase will continue servicing the existing Mazda loans and leases in its portfolio and work with dealership clients that use its commercial products, floorplanning and treasury services.
Chase Auto would not disclose the share of Mazda loans and leases in its auto portfolio. In the third quarter, Chase originated $9.1 billion in auto loans and leases and had a total of $83.1 billion in auto volume.
Mazda's move "was a strategic decision, which I obviously wish would've went the other way," O'Donovan told Automotive News. "But I understand it at the same time."
Mitigating the loss of its partnership with Mazda is a goal for Chase Auto for the coming year. The lender also aims to reinforce the benefits of its diversified credit businesses to its automaker and dealership clients.
Chase Auto had served as Mazda's financial arm since 2008. It was the second private-label partnership for the bank after Subaru signed on with the lender in 2001. Chase Auto's private-label relationships also include Jaguar Land Rover, Maserati and Aston Martin.
Though Chase Auto wouldn't disclose the share of its portfolio held by the Mazda business, industry sales numbers do show that the departing brand's volume represents a significant portion of Chase's private-label opportunity.
Of the 285,148 vehicles that Chase's private-label partner brands sold in the third quarter, Mazda's sales of 69,612 vehicles represented nearly one-fourth of the volume.