Santander Consumer USA’s third-quarter originations showed higher credit quality, the company announced yesterday. However, the shift is not strategic, but rather a sign of the times, Chief Executive Jason Kulas said during the earnings call.
The change in mix “instead reflects ongoing changes in the competitive landscape of the market,” he said.
SC’s originations in the subprime space declined year over year. Loans to consumers with Ficos below 540 fell to 13% of the portfolio from 14%, while loans to consumers without credit scores dropped to 12% from 15%. On a dollar basis, 3Q originations to the 540-credit-score group were $501.9 million; originations to those without credit scores were $463.3 million.
SC originated $5.2 billion in 3Q, down 31% from the same quarter a year prior, also due to “disciplined underwriting” and increased competition in the prime space, Kulas said.
Separately, SC plans to roll out a dealer VIP program nationwide next year, which allows dealer rewards based upon achieving certain volume thresholds, he said. Through the program, the company hopes to drive incremental business and increase its share of Chrysler originations, he added.
SC is also in the final stages of a strategic agreement with Banco Santander to originate and flow prime and near-prime retail loan assets, which will provide the opportunity for SC to become more competitive in the prime space and should benefit its overall relationship with Fiat and Chrysler, Kulas said.
