Mitsubishi Motors Corp. has sold its auto lending business in the U.S. to Ally Financial Inc. – a move that many of its dealerships welcomed. The price and further details of the deal were not disclosed. Mitsubishi, one of the smallest car companies with a captive finance arm in the U.S., is selling to Ally (which used to be General Motors’ lending division).
Since Ally was spun off during GM’s bankruptcy, it had since become one of the biggest auto lenders in the U.S. In a statement, Don Swearingen, executive vice president of Mitsubishi’s U.S. sales division, said that the company is “pleased” to have Ally as a financial partner that is able to give its dealerships the products and services they need.
Under the deal, Ally will replace Mitsubishi Motors Credit of America Inc. (which was established in 1991) and will be Mitsubishi’s preferred retail and wholesale lender. Ally will be responsible for supplying the automaker’s more than 380 dealerships in the nation with floorplan loans to purchase cars for showroom inventory and with capital loans to acquire land for an expansion or for the remodelling of a store.
The automaker had a gathering of around 30 dealerships last Friday to give them a briefing. Dealers said that at the end of May, Mitsubishi’s lending arm will stop issuing new-car loans. Its wholesale business will be shifted to Ally in June.
When interviewed by Automotive News, Mitsubishi dealer Scott Grove said that Ally will provide the company with “some really good wholesale programs.” He shared that with Mitsubishi, the programs were “just ok” but with Ally, he sees a “capacity and appetite.”
Ever since President Jeff Young left last fall, the interim president of the lending arm had been Dan Booth, the CFO of Mitsubishi Motors North America. He will stay with the automaker as its CFO.
To handle Mitsubishi’s relationship with Ally, a move to Mitsubishi Motors North America will be made by two senior executives at Mitsubishi’s finance company, namely: Paul James and Diane Cutillo.
The terms of their deal specify that Ally will give jobs to all other workers in the auto business. With sales of just 77,643 units in 2014 in the U.S., Mitsubishi is one of the smallest auto brands that have its own U.S. captive finance arm.
Other smaller brands have entered agreements with huge names in the banking industry to cut their capital costs. For instance, JP Morgan Chase and Co. has existing deals with Jaguar, Land Rover, Mazda and Subaru.
Ryan Gremore, who heads the automaker’s dealer council in the U.S. and is the general manager of a dealership in Normal, Illinois, said that Ally has “more strengths” and appreciates that it is in the business of lending while Mitsubishi is in the car business.