Stellantis Financial Services’ CEO on becoming ‘true captive’

Stellantis Financial Services grew the new captive’s portfolio significantly in 2023 and is focused on attracting dealers to its “true captive” financing arm. Stellantis Financial Services' (SFS ) portfolio grew more than 243% year over year in 2023 to $7 billion , according to an Auto Finance News analysis of the latest Big Wheels Rankings data . The big YoY jump is partially due to SFS’ entry into the market as a captive in 2021 after Stellantis acquired First Investors Financial Services . Strong leasing and dealer penetration also helped the captive grow and are key to future growth, Tommy Moore , president and chief executive of SFS U . S . , told Auto Finance News . Leasing volume, which makes up 45% of SFS’ business, and dealers shifting to the captive helped drive the lender’s portfolio growth, Moore said. Since January, SFS has become the top retailer, lease and loan provider for Chrysler Dodge RAM dealers, Moore said. These dealers are choosing to move their business to the captive, which previously wasn’t an option. The captive is focused on growing its portfolio by signing on more dealers after leaning on its private-label relationship with Santander Consumer USA while the OEM built out its the captive, Moore said. Santander , operating as Chrysler Capital , has provided private-label financing for Stellantis since 2013 , and , in April 2022 , the lender extended its agreement with the automaker through 2025. The relationship with Santander allowed Stellantis time to build. “The Santander partnership ends at the end of 2025,” he said. “We will be the only captive at that point. . The exclusivity is helping us quite a bit, because we're a true captive.” Moore spoke with Auto Finance News about managing future growth at SFS and his strategies and goals for 2024. What follows is an edited version of the conversation. AFN : How does SFS plan to keep up its momentum on the heels of 243% YoY growth in 2023? Tommy Moore: The number will go down, not because our volume goes down, but because we started with a low base. Our base is getting bigger. Our mission statement is to support our dealers and support our brands, and that's what we plan to do. There's still a lot of room for us to grow as we continue to get dealers to choose us as their No. 1 lender. . We're making a lot of progress on that front. We'll continue to see a nice growth over the next couple of years. Will it be 243%? Maybe not, but it will still be a big number since we still have a lot of room to grow, and the numbers are going to be much larger because the base is smaller. AFN : Hybrids and plug-in sales were strong in Stellantis’ latest earnings report. How is SFS supporting EV sales and financing? TM: We're here to finance those vehicles. We're seeing a big increase in activity around hybrids, and people are going more for the hybrids than into the EVs, but we're here to support both brands. We really don't have a big EV product right now. We do have hybrids , and that seems to be what's the most popular with consumers. AFN : We’ve started to see inflation come down, but interest rates remain at two-decade highs. Has SFS adjusted underwriting standards for the higher rate environment? TM: That is never-ending. We've got a very strong credit shop. We never had an unprofitable year in 33 years. It’s a journey. You're constantly turning the dial in one direction or the other. We're looking for opportunities. We're also looking for early trends before they become a problem and turning dials to tweak our policies. Same thing on residual values on the lease side. We have been doing most of our deals in the super prime, prime and near prime spaces. AFN: Lenders are looking more into payment-to-income (PTI) ratios when making loan decisions , given the current economic environment. Is SFS also prioritizing PTI versus debt-to-income (DTI) ratios? TM: I’ve been looking primarily at PTI for 33 years. From a credit perspective, PTI and loan-to-value are the things that we stay focused on. DTI is less reliable, because there's a lot of debt in reporting to the credit bureaus. I like the concept of DTI, but what I have found over the years is that they're very understated when you calculate them, because there's a lot of factors that you don't have access to that data , or things that are not being reported to the credit bureaus that you don't have as well. What we found is PTI is a much more predictable metric. Auto Finance Summit, the premier industry event for auto lending and leasing, returns Oct. 7-9 at Wynn Las Vegas. To learn more about the 2024 event and register, visit www. AutoFinanceSummit.com.

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