Report: Chrysler Mulls Captive Comeback

Is Chrysler looking to structure its own captive again? Just this week, we heard about Volvo’s announcement to form Volvo Car Financial Services through a financing partnership with Bank of America. Today, The Wall Street Journal is talking about the possibility of Chrysler heading down a similar path. 

Chrysler, which gave up Chrysler Financial during its 2009 bankruptcy, has used Ally Financial as its preferred lender for customer loans and leases, and for dealer inventory loans. With its contract through Ally Financial scheduled to end in 2013, Chrysler is talking to some major lenders, including Ally and JPMorgan Chase & Co., to create a new lender, according to the article.

WSJ spoke with sources “familiar with the matter” who said: 

• The current arrangement with Ally has been good, but it hasn’t allowed Chrysler to pursue some potential loan customers other automakers have enjoyed, particularly in leasing.
• Ally also hasn’t provided so-called “floorplan” loans used to buy inventory to some weaker dealers.
• Other major automakers, including Ford Motor Co., General Motors Co. and Toyota Motor Corp., have in-house lending arms that industry executives say provide affordable financing to dealers and consumers and which can ensure credit availability in an economic downturn.

Chrysler’s deal with Ally, the largest financier of new car loans, came after the Obama Administration determined that Chrysler Financial could survive only with a major cash infusion, which it refused to provide, WSJ.com said. Chrysler Financial continued to operate as a third-party auto lender and insurance provider under the ownership of Cerberus Capital Management LP, the private-equity firm that bought Chrysler from DaimlerChrysler Corp. in 2007. The equity firm agreed to sell it to TD Bank at the end 2010.

Is Chrysler looking to structure its own captive again? Just this week, we heard about Volvo’s announcement to form Volvo Car Financial Services through a financing partnership with Bank of America. Today, The Wall Street Journal is talking about the possibility of Chrysler heading down a similar path. 

Chrysler, which gave up Chrysler Financial during its 2009 bankruptcy, has used Ally Financial as its preferred lender for customer loans and leases, and for dealer inventory loans. With its contract through Ally Financial scheduled to end in 2013, Chrysler is talking to some major lenders, including Ally and JPMorgan Chase & Co., to create a new lender, according to the article.

WSJ spoke with sources “familiar with the matter” who said: 

• The current arrangement with Ally has been good, but it hasn’t allowed Chrysler to pursue some potential loan customers other automakers have enjoyed, particularly in leasing.
• Ally also hasn’t provided so-called “floorplan” loans used to buy inventory to some weaker dealers.
• Other major automakers, including Ford Motor Co., General Motors Co. and Toyota Motor Corp., have in-house lending arms that industry executives say provide affordable financing to dealers and consumers and which can ensure credit availability in an economic downturn.

Chrysler’s deal with Ally, the largest financier of new car loans, came after the Obama Administration determined that Chrysler Financial could survive only with a major cash infusion, which it refused to provide, WSJ.com said. Chrysler Financial continued to operate as a third-party auto lender and insurance provider under the ownership of Cerberus Capital Management LP, the private-equity firm that bought Chrysler from DaimlerChrysler Corp. in 2007. The equity firm agreed to sell it to TD Bank at the end 2010.