Toyota Financial Services new CEO Cooke on key relationships

Toyota Financial Services Chief Executive Scott Cooke is leaning on his decades of experience at the company and a strong team as he steps into his new role. [caption id="attachment_58336833" align="alignright" width="189"] Scott Cooke, Chief Executive , TFS [/caption] Cooke was named CEO of the captive in December after Mark Templin stepped down. Templin remains CEO of TFS Americas Oceania Region. The changes took effect on Jan. 2. Cooke has held several leadership roles across analytics, finance, dealer credit, risk, strategy, treasury and business intelligence since joining Toyota in 2003, according to the company. His experience has “been a blend of financial services and the auto side of the business. It’s given me a broader view of the company, but a detailed view so you can connect all the dots,” he told Auto Finance News . “You look at a bigger company, like we have here, and knowing how all the pieces fit together is a key part of it. As we look forward and look at the ever-changing market, as we develop strategies going forward, understanding how the pieces fit together is a big part of it." TFS had $98.8 billion in loan and lease outstandings at yearend 2022, according to Big Wheels Auto Finance Data 2023 . When it comes to leadership, Cooke takes inspiration from his time as a baseball coach. “I played and coached college baseball; it’s a big part of who I am,” he said. “I've always grown up in team sports. It’s ingrained in me that the corporation is a team. I’m fortunate to inherit a very strong team.” Auto Finance News spoke with Cooke about the transition to his new role and his leadership style. What follows is an edited version of the conversation. Auto Finance News: From a business operations perspective, what are your priorities in the first three months as CEO? Scott Cooke: My first three priorities are all the same: people, people and people. For the first six months, I plan to spend a lot of time with our dealer partners and with our team members across the country, primarily listening. Being here for 20 years, you get caught up in the operation quite a bit, but I want to listen. That will help in areas that we can improve on what we're doing for our customers, for dealers and for our division partners. AFN: What does a typical day in your job look like? SC : Most days I get here, I set my bag down and I walk the floors. I'm very visual; I like to do things in person. In a day and age where technology is the preferred medium for people to communicate, I like to see people, so I walk around and say good morning to people, lay eyes on people. That's usually the way my day starts. There's always the issue of the day; that’s always there and making sure that people have the time, space and resources they need. Middle of the day is usually spent with a lunch meeting. It's usually a business meeting with one of our leaders. In the afternoons, we spend time on something for dealers or one of our division partners. Before we get to work, I usually want to leave after my kids leave for school. That's important to me. I think balance is created, not found. I have two boys, they will be 12 and 18 this month. It's super important to me that I lay eyes on them and spend time with them in the morning. No matter whether I'm traveling or I'm doing a late-night meeting, I might be helping with homework on Teams. That's my first priority, always. AFN: What is your take on the state of the auto finance market given that interest rates are likely to come down? SC: The [seasonally adjusted annualized rate] is probably going to be around 15.6 million to 16 million units. We're preparing for the high end of that mark. There's still uncertainty that goes with it; I think the market is pricing in a decline. The question is how much and how fast. When you look at the global military conflict, the U.S. election is coming up this year, and you have other elements of uncertainty. We're all going to have to continue to be nimble. Not only will low rates be a key driver of volume as affordability becomes better for folks, but the lease mix will be something that we will be focused on. It’s an important part of what we do around brand and dealer loyalty. It's been lower than normal in the last couple of years. Leasing is something we're watching , and we want to be smart about it. It’s a key area of focus for us in the division. We’re in the 20% range as a percentage of our business and we’d like to be in the 30% range. We think it’s a good product for a lot of our customers, especially our luxury brand customers. Our division partners have been disciplined in their use of incentives and we want to be thoughtful. We want to be very disciplined, not only for the new-car side of it but also from the impact to the used-car residual value. The two big things in mind are inventory, which seems to be coming back, and affordability, which we have some optimism on the horizon. AFN : Has TFS made any changes to its underwriting criteria given the potential for rising delinquencies? SC : We've trimmed a bit around the edges; that's been true across the industry. Our core business and the core underwriting are the same. We're very comfortable with our core book of business. Our dealers know what we like. As we look at some of the used cars in a period where we didn’t have a lot of new cars, we were very supportive around used cars. We did more of used financing than we had previously, but we were being thoughtful about it. We’re shifting back more to the normal, but we’re still buying the core of what we’ve always bought. We're prioritizing investments in places where it will make it easier for customers and dealers to do business with us. The way we looked at it is around capabilities and that customers or dealers want the functionality that they want. We're prioritizing the things that mean the most to customer and dealer satisfaction. During the pandemic, getting lease-end prepared was a big focus for us. We invested in a self-inspection app to make it easier for dealers and customers. We want to be the leasing business. AFN : How does TFS’ private-label businesses play into your strategy in 2024? SC : The private label business for us has been a very good business. We have great partnerships. We’ve been trying to refine that model. We'd like to do more, but right now we're focused on continuing to improve what we've done with our current partners. We'll see where that takes us, but it's a business that we like. -- Additional reporting by Joey Pizzolato Early Bird registration is now available for the second annual Auto Finance Summit East May 1-3, which gathers lenders, dealers and fintech innovators in an event designed to bring the power of technology to a cross-section of industry players. Early Bird pricing ends March 15. Visit AutoFinance.Live to learn more.

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