Wells Fargo eyes responsible growth of auto amid tariffs

Wells Fargo Auto ’s origination volume grew year over year in the first quarter as the bank is prioritizing responsible growth of the auto business amid tariffs and market uncertainty. The San Francisco-based bank is focused on gradual, solid returns and long-term impact on profitability, Chief Financial Officer Michael Santomassimo said on today’s earnings call. “Our focus [on auto] is not growth at any cost... We're going to continue to focus on generating solid returns as we grow that business. If things get a little irrational at times, we’ll pull back and focus in the right places.” — Michael Santomassimo, Wells Fargo

“Our focus [on auto] is not growth at any cost,” he said. “We're going to continue to focus on generating solid returns as we grow that business. If things get a little irrational at times, we’ll pull back and focus in the right places, but I do think you'll start to see over time that -- those balances to trough grow a little bit and hopefully at better returns .” Wells Fargo’s auto originations hit $4.6 billion in Q1, up 12.2% YoY but down 8% from Q4 2024 , according to the earnings supplement published today. The fourth quarter of 2024 marked the first YoY uptick in auto originations at the bank in nearly three years as the lender tightened credit standards and prioritized returns. The bank’s outstanding auto loans make up 11% of its consumer portfolio and 4.5% of its total outstanding book. In related news , Chase Auto ’ s originations also rose YoY in Q1, according to the bank’s earnings supplement today. [caption id="attachment_56408207" align="alignnone" width="2560"] Photographer: Victor J. Blue/Bloomberg[/caption] Benefits of VW financing Wells Fargo’s agreement with Volkswagen Financial Services , established in Q3 2024, partially drove the increase, Chief Executive Charlie Scharf said during today’s earnings call. The bank entered a co-branded agreement with the captive to become the preferred purchase financing provider for Volkswagen and Audi brands in the United States as of the first half of 2025, Scharf previously said. "Our auto business is on a journey." — Charles Scharf, Wells Fargo “Our auto business is on a journey. We’ve got some question marks in terms of what tariffs will mean to some of our partners out there,” Scharf said today. “But the deal we’ve done to be the captive on new cars with Volkswagen and Audi is a significant plus and will help us become more of a full-spectrum lender where we can increase profitability of that business.” However, in response to 25% auto tariffs imposed by the administration of President Donald Trump , Audi paused all U.S. imports after April 2. Q1 auto outstandings slip Auto outstandings dropped 10.2% YoY and 2.1% quarter over quarter to $41.5 billion, according to the Q1 earnings supplement. Wells Fargo was the 10th-largest bank by outstanding volume at yearend 2023, according to the latest Big Wheels Ranking data. The average interest rate across auto loans hit 5.3% in Q1, up 35 basis points (bps) YoY and 4 bps QoQ, according to the supplement. Meanwhile, Wells Fargo ended a 2022 consent order with the Consumer Financial Protection Bureau that targeted the bank’s practices related to auto loans, mortgage and deposit accounts. This helped credit card originations, net checking account growth and customer experience , Scharf said on the call. “Following the termination [of the order] … we have been taking measured actions in consumer, small and business banking that started to generate modest growth across a number of metrics,” he said. Credit losses dip down Credit performance improved across the bank’s auto portfolio in Q1 as 30-plus day delinquencies, net charge-offs and credit loss allowance all declined. According to the supplement: Accounts more than 30 days past due dropped 40 bps YoY and 44 bps QoQ to 1.9%; Net charge-offs fell 34 bps YoY and 15 bps QoQ to 0.6%; and Allowance for credit losses fell 41 bps YoY but ticked up 2 bps QoQ to 1.5%. “Auto revenue decreased 21% from a year ago, driven by lower loan balances and loan spread compression,” Santomassimo said. “The spread compression reflects our previous credit tightening actions, which have resulted in an increased concentration of higher FICO borrowers in our portfolio, as well as improved credit performance.” Shares of Wells Fargo [NYSE: WFC] were down 1.0% at market close to $62.51. Wells Fargo has a market capitalization of $197 billion. Editor’s note: This story has been updated to reflect proper attributions and add context. Auto Finance Summit East 2025 is set for May 12-14 at the JW Marriott Nashville featuring fireside chats with Santander Consumer USA and Chase Auto. Visit autofinance.live for more information. Click here to register for the event .

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