AFN: About two years ago, Chase had reduced its dealer base in order to strengthen the relationships it had with certain dealers. Is that still the strategy for Chase?
BJ: Our dealer count has kind of flattened out. There was a period where we just couldn’t provide the service to that many dealers that we wanted, so we did trim the ranks. We were able to provide better service for the dealers that were really, quite frankly, capable of giving us the volume that we would like, and the quality of volume that we’d like. We’re not thinking of cutting anymore. We’ve kind of plateaued around 15,000 dealers.
AFN: The last couple of quarters we’ve seen some of the major lenders strategically pull back on subprime auto. What about Chase?
BJ: We do offer our dealers what you would call a full- spectrum offering, but we predominantly do prime. The vast majority of our volume is prime, but do we buy some deals on the subprime segment? We do, but it’s very, very few.
AFN: Is the prime segment something you’ve always focused on, or is that something you’ve changed recently?
BJ: We’ve really not changed our nonprime offering, it’s kind of the same as it was, but because the market has changed — meaning more capital has come into it and certain new entrants have decided to take a segment of subprime — it’s now kind of diminished that opportunity down there. We would still like to take the loans when we feel the structure is proper, but there’s an opportunity now for dealers to send it to bigger advances, longer terms, and that’s not really where we’re interested in playing right now, in that segment. So the market has kind of shifted down there — that’s where the investors are.
AFN: What are your thoughts on interest rates, particularly now that the Fed decided not to raise rates, yet.
BJ: For what we do, on the retail side, the bigger factor is consumer confidence: When they feel confident, they buy new cars, they take on more debt, etc. We are seeing consumer confidence, we’re seeing employment in a good area, so a 50- to 100-basis-point rise on a new car loan is not going to affect that person’s ability to buy a car. So interest rates aren’t a concern on this side of it, and I still believe that if we start seeing rates go up, the other economic factors are going to be so great, that that’s what will really continue to drive car sales.
AFN: With the system integration now behind you, what are Chase’s technology investments and priorities going forward?
BJ: We continue to grow with the industry, so if the industry wants to go more digital, then we’ll follow along. Our technology investments continue to be in that segment, and we want to ensure that if there’s continual change in the booking process, the consumer transacting the whole way digitally, we’d like to be part of that. Everything we’re doing now is driven by the industry and external factors because I think internally we’ve done what we’ve needed to do. So now our investment dollars, our efforts, and our resources are towards where the industry is headed, which I think is digital.
