Dealers in Limbo With Stalled Wachovia Buyout
With the acquisition of Wachovia Corp. up for grabs, the bank’s auto finance unit is poised to lose loan volume.
Wachovia’s banking operations were set to be bought by Citigroup Inc., in a $2.2 billion deal brokered by the Federal Deposit Insurance Corp. on Sept. 29. But the acquisition was sidelined four days later, when Wells Fargo & Co. agreed to buy the entire Charlotte, N.C.-based bank for $15.1 billion. As of press time, a New York judge had blocked the Wells Fargo deal.
Meanwhile, dealers have noted processing slowdowns and more denied loans than normal at Wachovia Dealer Services, the bank’s auto finance unit.
“I sent a deal two days ago,” said Andriy Ishuninov, finance manager at Galpin Lincoln Mercury Volvo Mazda, in Valencia, Calif. “I sent it around noon and got a response the next morning.” The prospective car buyer had a 660 credit score, “something we would’ve thought they would buy,” he said. But the application was denied.
Wachovia had been “buying pretty deep for us,” Ishuninov said.
Jane Shek, finance manager at West Covina Lincoln Mercury Mazda has also noticed service hiccups at Wachovia Dealer Services. “They’re turning down deals,” she said. “It’s a mess with them. It takes a day and a half to get a decision. Everything you try to give them needs supervisor approval.”
As such, Shek has not “sent a deal in a few days,” she said.
When contacted by Auto Finance News, Alhambra Mazda Finance Manager Nick Borrelli had applications “pending for a day” with Wachovia Dealer Services. The dealership averages 10 to 15 deals per month funded by Wachovia.
Despite apparent delays, the financier is working to convince dealers that processing and decisioning are continuing unhindered.
“They were sending out faxes saying it’s business as usual,” said Cyndee Sherrick, finance manager at Tustin Mazda. “Three months ago I asked them, ‘How long is it going to take for your bad mortgages to hit the car paper?’ They said, ‘It’s not.’ But it is.”
A Wachovia spokeswoman failed to return calls for comment.
Until the acquisition is sealed, dealers are unsure how the auto finance unit will be affected. “It’s hard to say what will happen,” said Jerry Ternbull, finance manager at Star Ford, in Glendale, Calif. “Who knows what works in the hearts of companies? It depends what the new company’s policy will be about our business.”
—Marcie Belles
