As Fiat Chrysler Automobiles closes the door on the potential Groupe Renault merger, withdrawing its merger proposal to the French OEM Wednesday evening, another door may open for Chrysler Capital owner Santander Consumer USA.
While SCUSA is “no longer talking to Chrysler about buying Chrysler Capital” — a discussion that started in May 2018 — Credit Suisse Managing Director Moshe Orenbuch told Auto Finance News he “suspects there could be some renegotiation of the [existing] deal and extend that.”
Much of SCUSA’s commentary around a potential acquisition has veered toward repairing relations and “optimizing” its current contract, as Chief Executive Scott Powell put it during last year’s fourth-quarter earnings call.
The original agreement between SCUSA and FCA, inked in 2013, is slated to expire in 2023. It included a termination provision if the lender failed to meet origination goals within the first five years, which has been the case. As of May 1, six years after the partnership’s inception, Chrysler Capital’s penetration rate was 31% — below the 65% target laid out in the original agreement.
Chrysler Capital originated $2.4 billion of loans in the first quarter, up 23% year over year.
The most likely scenario for SCUSA is an “extension of the deal,” Orenbuch said, noting that although FCA stepped back from plans to create a captive a month ago, “it does appear they are revisiting that.”
On Wednesday, FCA announced it was withdrawing a merger proposal made to Groupe Renault effective immediately, according to the company press release. The statement said “the political conditions in France” hindered “such a combination to proceed successfully.”
