Stellantis plans new U.S. auto lender besides Santander

The new partnership could spell trouble for Chrysler Capital, the operation Santander and Chrysler set up in 2013 before the U.S. automaker completed its merger with Fiat.

September 01, 2021 02:16 PM

Bloomberg

BLOOMBERG

Stellantis is setting up a new U.S. financial-services partnership with a company other than Santander Consumer USA Holdings Inc., according to people familiar with the matter.

Details of the change will be shared later Wednesday, said the people, who asked not to be identified ahead of the announcement. Stellantis is the carmaking group formed via the merger between Fiat Chrysler and PSA Group early this year.

The new partnership could spell trouble for Chrysler Capital, the operation Santander and Chrysler set up in 2013 before the U.S. automaker completed its merger with Fiat. The business is wholly owned and operated by Santander and has handled much of the loans U.S. consumers take out to finance vehicle purchases. It also lends to dealers.

Representatives for Stellantis and Santander declined to comment. The lender’s U.S.-listed stock fell as much as 1.1 percent and was down 0.2 percent as of 12:30 p.m. New York time. Stellantis shares traded 0.2 percent lower.

Fiat Chrysler tried several years ago to pursue a different financial-services strategy. Then-CEO Sergio Marchionne announced in June 2018 that the carmaker intended to establish a captive-finance company either by acquiring Chrysler Capital or another business, or by building one from scratch. The automaker abandoned that effort after Marchionne’s sudden death that year and opted to keep its arrangement with Santander.

In February of this year -- a month after the PSA merger -- Santander CEO Mahesh Aditya said the lender’s relationship was not expected to change. During the latest quarter ended in June, Chrysler Capital financed 33.8 percent of Stellantis’ vehicle sales. It is one of the largest providers of subprime auto loans in the U.S.

This month, Banco Santander SA’s U.S. unit agreed to buy up the Santander Consumer shares it doesn’t already own. The offer values the outstanding 20 percent of the auto-lending company that Santander Holdings USA Inc. doesn’t already own at about $2.5 billion.