Chrysler Said to Talk With Santander to Be Main Lender
Chrysler Group LLC, the automaker controlled by Fiat SpA (F), is in exclusive talks with Banco Santander SA (SAN) to make its U.S. unit the automaker’s preferred financing provider, people familiar with the matter said.
Chrysler entered a 30-day negotiating period with the lender, which would be the U.S. automaker’s main partner for financing with customers and dealers, said the people, who declined to be identified because the negotiations are private.
Sergio Marchionne, the chief executive officer of Chrysler and Fiat, said at the Paris Motor Show in September that Santander Holdings USA and JPMorgan Chase & Co. (JPM) were “possible” financing partners for Chrysler. The Auburn Hills, Michigan-based automaker said in April that it would let its preferred-lender agreement with Ally Financial Inc. (ALLY) expire in April 2013.
“You need to know that your lender of choice is going to be available and willing to make the loans necessary to move product,” Alec Gutierrez, an analyst for researcher Kelley Blue Book, said yesterday in a telephone interview. “The question will be, is this lender still going to be willing to carry over a lot of the aggressive programs that Ally was running?”
The pact with Detroit-based Ally requires Chrysler to allow Ally to finance a minimum percentage of vehicles sold with subvented loans, which are those made to consumers at below- market rates. Automakers pay lenders to make up the difference.
The expiring accord with Ally doesn’t cover other business that the lender does with Chrysler dealers, such as wholesale financing, so-called standard-rate financing for consumers, or leasing.
“That midsize segment has become just absolutely flooded with great offers on brand new and redesigned product,” he said yesterday. “Some of those lease offers out there are really pretty killer, and you have to assume that they’re moving quite a bit of volume in that segment with those offers.”
Laurie Kight, a U.S. spokeswoman for Santander, Spain’s biggest bank, didn’t respond to messages left by telephone or e- mail. The company’s U.S. operations are based in Fort Worth, Texas.
Chrysler, the No. 3 U.S. automaker behind General Motors Co. (GM) and Ford Motor Co., generates more than $25 billion in auto loans annually, people familiar with the matter said in February.
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