CULA, facing captive competition, looks to branch out

Credit Union Leasing of America ’s leasing share has dipped as the company’s credit union base faces increased competition from captives , including Stellantis Financial Services . CULA is working to grow its leasing volume across several automakers due to losing part of its leasing share to Stellantis’ captive, Mark Chandler , vice president of business development, told Auto Finance News . Stellantis represents CULA’s highest volume product, but CULA cannot compete with the incentives Stellantis can offer as the OEM leans more on its captive finance arm, he said. “The credit union market space on leasing , where we have a broader reach, is down a little bit,” Chandler said. “We're faced with more competitors than we have faced in a long time, [from] the captives and the non-captives. A large portion of our leases were through the Stellantis vine — Chrysler, Dodge and RAM — and Stellantis with their new captive is starting to capture more of the market that we used to capture.” Stellantis in 2021 acquired F1 Holdings Corp. , the parent company of First Investors Financial Services , which later was renamed to Stellantis Financial Services and formed the foundation for the captive. [caption id="attachment_58337717" align="aligncenter" width="1920"]<img class="wp-image-58337717 size-full" src="https://www.autofinancenews.net/wp-content/uploads/2024/02/404817291-scaled-e1708030805604.jpg" alt="The SUSTAINera Circular Economy Hub at Stellantis NV's Mirafiori complex in Turin, Italy, on Thursday, Nov. 23, 2023. Stellantis will invest in hybrid-electric transmission production and recycling activities at its iconic Turin factory thats being retooled into a battery-vehicle hub to help safeguard jobs. Photographer: Giuliano Berti/Bloomberg" width="1920" height="1280" /> (Photo/Bloomberg) [/caption] The captive has been strategically scaling operations since and has seen strong growth in loan and lease volume from dealers, SFS President and Chief Executive Tommy Moore told AFN . Leasing makes up 40% to 45% of Stellantis Financial Services’ origination volume, he said, adding that floorplan financing volume has also grown. SFS’ receivables tallied $7 billion as of Dec. 31, three times higher than a year prior and on target to exceed $10 billion in 2024. “As dealers have started moving over to us, more of the [financing volume] has come our way,” Moore said. “Chrysler, Dodge, Jeep, Ram [have] not had a true captive. Dealers are happy to have a captive finance company that’s here to support them.” CULA is working to increase its leasing volume with brands such as Chevy , Honda , Hyundai, Kia , Subaru and Toyota , Chandler said. “We're diversifying our portfolio, [which is] dependent on the Stellantis brand, at least for now,” he said, declining to provide specifics on lease volume or market share. "We're diversifying our portfolio." -- Mark Chandler, CULA “Stellantis is saying to third-party leasing companies, ‘we’re going to do this on our own going forward,’” Chandler said. “I believe they're going to lose some market share from the third-party leasing companies. ... They’re taking their products out of the mix as far as a target for our business model, and we’re going to go in other directions.” Santander Consumer USA , operating as Chrysler Capital , also has provided private-label financing for Stellantis since 2013, and in 2022 extended its agreement with the automaker through 2025. Chrysler Capital continues to provide consumer loans, leases and dealer loans alongside Stellantis’ captive, according to Santander’s website. The relationship with Santander allowed Stellantis time to build out the captive, Moore said. “It allowed us to be able to build out our infrastructure; we could not have handled that amount of growth coming in on Day One,” he said, adding that Chrysler Capital continues to get leasing volume. Credit union leasing share below 2% CULA’s leasing volume has decreased in line with industrywide trends. Credit union share of new vehicle leasing in the fourth quarter fell to 1.97% compared with 3.76% in Q4 2022 and down from 5.4% in pre-pandemic Q4 2019, according to Experian data provided to AFN . Captives held 80.6% of the new vehicle leasing market in Q4, up compared with 76% a year prior and 70.6% in Q4 2019. Despite challenges facing the lease market for credit unions, CULA grew its footprint in 2023. It offers leasing through credit unions in 23 states and has more than 40 credit unions active on its platform, according to a company release. Utah-based Mountain America Credit Union signed with CULA in January to offer leasing to its 1.1 million members, according to CULA. Mountain America has more than $18 billion in assets. The addition brings CULA’s reach to Utah, Idaho, Montana, Oregon and Washington, and expands its presence in Wyoming and Nevada. “We’re feeling pretty good about the future in regard to our footprint across the country,” Chandler said. “We have more credit unions than we've ever had, but our total market share is down because of competition.” CULA is relying on increased volume on a per-store basis to maintain market share, Chandler said. “We used to get a lot of volume out of 20% of our stores; now we're trying to get a little more volume out of all the stores,” he said. CULA is “less dependent on a smaller percentage of opportunity. [We’re taking] advantage of more opportunity by being more diversified.” CULA sees a large portion of its leasing volume on SUVs, crossovers and trucks as commuter cars and hybrid vehicles come into the mix, Chandler said. “We're an equal opportunity leasing company, so we'll go wherever it makes the most sense from a risk side,” he said. “We're trying harder to find more opportunity. ... What that does is opens the door to add more dealerships and to improve our footprint.” CULA added 274 dealers to its program in 2023, a 17% year over year increase, according to the release. “Even though [leasing volume] is down, with our dealer growth we’re setting ourselves up for a stronger future,” Chandler said. Registration is now available for Auto Finance Summit East 2024 , May 1-3 in Nashville, Tenn., which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross section of industry players. Visit AutoFinance.Live to learn more.

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