Dallas-based Santander Consumer USA Inc., one of the nation’s biggest subprime auto lenders, will remain the preferred provider through 2025 of loans and leases to buyers and dealers of Jeep, Ram, Fiat, Chrysler, Dodge, Maserati and other brands of automaker Stellantis.
Stellantis, the company created by the merger of Fiat Chrysler and France’s PSA Group in January 2021, recently agreed to the contract extension with Santander Consumer, doing business as Chrysler Capital. Stellantis last year acquired its own finance arm, leading to speculation that it might let Santander Consumer’s previous 10-year deal expire in April 2023.
“This is one example of how we operate as a global company,” said Santander Consumer CEO Mahesh Aditya. “A lot of our ability to talk to large European manufacturers like Stellantis has been driven by our headquarters in Spain. We have strong relationships with Stellantis and Ferrari.”
Madrid-based Banco Santander SA, which has 153 million customers in the U.S., Europe and Latin America, is the owner of the auto financing company, which Santander Holdings USA Inc. took private last August in a deal that valued the company at $12.5 billion.
“We wanted to be able to strengthen and expand the business and we can do that by better combining some of our consumer deposits from our banking franchise with our auto business here to allow us to be more competitive across a broader range of lending activities,” said Santander US CEO Tim Wennes.
Netherlands-based Stellantis bought Houston-based auto lender First Investors Financial Services Group late last year and renamed it Stellantis Financial Services US Corp. The two-year extension places Santander Consumer in a “complementary” role to Stellantis’ company.
“While Stellantis announced in 2021 the formation of its own captive finance arm, SC and Stellantis have continued to enjoy a mutually beneficial working relationship,” Aditya said in a statement.
In its last regulatory filing before going private, Santander Consumer said it originated $11.1 billion in Chrysler Capital loans in the first nine months of 2021 — a figure that represented 53% of its retail installment contracts. It also originated $5.8 billion in Chrysler Capital leases.
The U.S. was the most profitable country for Banco Santander last year, and Santander Consumer was its most profitable arm in the U.S., according to its latest earnings report. Santander Consumer has $60 billion in assets and more than 3 million customers. The auto lender that started in 1997 has about 5,000 employees, who mainly work out of Santander Tower in downtown Dallas.
The contract extension follows a new partnership announcement in March for Santander Consumer to provide customer and dealer financing programs for Franklin, Tenn.-based Mitsubishi Motors North America Inc., which reported a 45% increase in retail sales for the first three months of 2022.
As a provider of financing for new and used vehicles, Santander Consumer has benefited from the dramatic rise in car prices during the pandemic. The average price of a used car jumped more than 35% from March 2021 to March 2022, according to data from the U.S Bureau of Labor Statistics.
A focus in the coming year for the company is creating an easier, smoother car-buying experience for customers through its partnership with San Francisco-based fintech firm AutoFi, Aditya said. The new technology includes tools for streamlining the financing process, including a feature that shows a consumer all the cars on a dealer’s lot that fit into their budget ahead of time.
“What we’re going to see increasingly is that the sale process is becoming more and more automated, and digital,” Aditya said. “So instead of having to go to a dealership and pick a car and spend two to three hours trying to get a loan, AutoFi shortens that process considerably because it creates a much, much faster interaction process between the dealer and the lender.”
