BMO Harris plans to expand back into markets it exited several years ago as part of a push to grow its indirect auto portfolio in 2018, Craig Harter, the bank’s head of U.S. indirect auto, told Auto Finance News.
In particular, Iowa and Michigan are two states the bank is targeting in hopes of winning over former dealer partners with its new dealer compensation model, Harter said.
In the summer, BMO Harris moved from a single flat-rate system to a three-tiered flat-rate model that gives dealers a little more flexibility to make a deal. “It’s something different from what they saw from us in years past, and so it definitely gets their attention when we come back in,” he said. “We’re really pleased with the rate of dealer enrollments and business that we’re getting from there.”
The company is also targeting states it’s never played in before, including California and Pennsylvania. “We’re very new as far as our entry, but it’s something that will help us as we look to get dealers up and running,” he said.
BMO Harris views the retraction of larger banks such as Wells Fargo Dealer Services from the auto finance space as an opportunity to grow, and BMO is willing to extend credit into nonprime credit buckets.
“As we’ve seen some of the competition pull back, we see it as an opportunity to expand from where we were a few years ago,” Harter said. “We’re not talking about subprime business, so we feel any move we do make it’s very measured. We do know if you see an increase in spread it usually comes with an increase in delinquency and losses, but nothing that’s out of where we have put our risk objectives for the future.”
