Chrysler Capital’s financial joint venture with Banco Santander expected to double leasing

Article by Christian Andrei, on February 15, 2013

After Chrysler Capital, the group's new financial joint venture with Banco Santander SA, has its launch on May 1, Chrysler Group anticipates that dealerships will increase the number of new vehicles they lease to almost double. Peter Grady, Chrysler's vice president of network development and fleet, said that leasing makes up just around 10% of Chrysler sales – far below the 18% industry average.

However, he said that Chrysler will maintain the industry average and will not attempt to move slow-selling vehicles with leasing. Grady added that the size of Santander and the low cost of funds mean that Chrysler Capital can then offer competitive subvented leases in additional segments. At the National Automobile Dealers Association convention, he said that the deal offers a chance to become aggressive in several places where it has yet to enter.

For example, Chrysler may offer extra leases on midrange minivans or the redesigned Chrysler 200, expected to arrive in 2014. Chrysler is the only Detroit automaker that doesn’t have its own captive finance arm. Chrysler’s name will be used by the Chrysler Capital joint venture. However, Santander's balance sheet will be offering consumer financing, wholesale floorplanning, and real estate and commercial loans through Chrysler's 2,500-strong network, which includes Fiat dealerships.

Nevertheless, the company won’t depend on subvented leases to move vehicles that aren't selling. Grady said that he’s unsure if the brand will go too much into leasing. This can be a heavy cost since it would have to pay on the back end with too many off-lease vehicles in a specific segment.

He said that he is confident that it will get to about 18% in a short time. On May 1, Chrysler Capital will replace Ally Financial Inc. as Chrysler's preferred lender. However, dealers will be free to work with whatever lenders they select. Santander presently runs consumer lending via several Chrysler dealers and will continue doing the same for its own brand too.

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