Santander In Line to Become Chrysler’s Primary Financier

Chrysler Group and Banco Santander SA are in exclusive talks for the lender’s U.S. unit to become the auto manufacturer’s main financing provider, sources close to the deal said.

The sources, anonymous as the talks are private, said Chrysler entered into a 30-day negotiation period with Santander, which would become the company’s primary partner for dealer and consumer financing.

At the Paris auto show in September, Chrysler and Fiat Chief Executive Sergio Marchionne said “possible” financing partners for Chrysler were Santander Holdings USA and JPMorgan Chase & Co.

Since May 2010, Chrysler has used Santander Consumer USA to finance new vehicles for subprime customers, buyers that generally qualify for used cars. As Auto Finance News reported in September, the lender has seen an enormous 3,000% growth in the carmaker’s financing volume since that subprime partnership began.

Back in April, Chrysler said that it would let its preferred-lender agreement with Ally Financial Inc. end the following April. As part of the agreement with Detroit-based Ally, Chrysler must allow the lender to finance a minimum proportion of cars sold with subvented loans, loans offered to consumers at below-market rates. The difference is made up by automakers.

The expiring pact doesn’t include other business, such as wholesale financing or standard-rate financing for customers or leasing, that Ally does with Chrysler dealers.

Chrysler is the No. 3 U.S. car manufacturer, behind General Motors Co., and Ford Motor. Co. Sources indicated earlier this year that the company originates more than $25 billion worth of auto loans each year.