Wells Fargo Dealer Services Inc. appears to be the lender best-positioned to take advantage of Lithia Motors’ pending acquisition of DCH Auto Group, Auto Finance News has found.
Although Lithia does not plan to announce any further specifics about its acquisition of DCH until after the deal closes in the fourth quarter of 2014, certain lenders could stand to benefit from the combination.
Lithia agreed on June 15 to acquire DCH for about $363 million. A syndicate of 14 lenders, including Wells Fargo, maintain Lithia’s main commercial financing arrangement, a $1 billion revolving credit facility created in 2012 and expiring in 2018, according to Lithia documents. Some lenders in the syndicate appear to offer retail loans through Lithia dealerships.
Auto Finance News asked a range of Lithia and DCH dealerships, posing as an average consumer, which lenders are available through the dealership group. Several lenders were named, but only Wells Fargo was mentioned by both Lithia and DCH dealers. The implication is that Wells has strong relationships with both dealership groups.
The combined Lithia-DCH will have 128 stores, however, no details have been made public about which lenders will be preferred by the dealership group. Arguably, this is the most significant preferred lender arrangement to come to market since 2013, when Santander Consumer USA became the preferred lender for all Chrysler Group brands.
Under that 10-year, private-label agreement, Santander Consumer USA provides financial services for dealer new and used vehicle inventory, as well as financing for construction, real estate, working capital and revolving lines of credit, under the separate unit, Chrysler Capital. It should be noted that it is unlikely Lithia-DCH would ink a private-label deal.
Wells Fargo is ranked No. 3 in originations and No. 4 in outstandings in the 2014 Auto Finance Big Wheels Data Report.
Lithia and Wells Fargo declined to comment.
