Creating captives: 2 executives to watch in 2023

Auto Finance News is pleased to present the fourth annual Executives to Watch feature, highlighting two auto finance executives who exude leadership, experience, and vision, and are expected to shake up the industry in 2023 and beyond. Jeff Butler returns home AutoNation ’s search for a lender to provide captive financing capabilities culminated in bringing in a company with nearly 40 years’ experience and a familiar face to lead the finance arm. For more than 10 years, Jeff Butler has held leadership positions at Calif.-based CIG Financial , where he became president in April 2017. Butler is now tasked with building out AutoNation Finance as president following the Fort Lauderdale, Fla.-based retailer’s acquisition of CIG Financial in October. [caption id="attachment_57332578" align="alignright" width="223"] Jeff Butler, President, CIG Financial [/caption] The move brings Butler back to familiar territory, having led consumer financial services at AutoNation for four years before joining CIG in 2012. “For me, it’s coming home,” Butler told AFN . AutoNation Finance is leveraging CIG’s technology to offer captive financing at AutoNation USA used-vehicle stores, Butler said, adding that AutoNation’s third-party lenders will remain in place. CIG Financial’s legacy business with more than 2,000 dealers in 20 states will also continue in some form as the captive is established, he said. AutoNation opened its 12th AutoNation USA store in Georgia during the third quarter and plans to build 130 stores across the country by 2026, Butler told AFN . “As AutoNation embarked on building out their used-car only platform, AutoNation USA, it was imperative that they develop a captive lending capability surrounding that part of the business,” he said. “They thought [CIG Financial] was a good fit based on the stability of the organization and the seniority and experience of our management team.” AutoNation Finance initially focuses on subprime consumers but will scale up the credit spectrum as growth opportunities arise, Butler said. “We're not building these stores to only attract subprime customers; it’s a wide array of inventory to attract a wide array of consumers.” — Jeff Butler The captive’s origination volume will largely depend on how quickly AutoNation USA stores come online, Butler said, noting no target has yet been set. AutoNation Finance is currently developing scoring models aligned with its risk appetite. “We're taking things slow, building [the captive] correctly and making sure that the foundation is extremely solid before we start to pick up the pace,” he said. The goal is to “build a solid program that supports the AutoNation USA platform and sets it up for long-term success.” Butler leads by focusing on the entire field and anticipating the needs of the business both in the short- and long-term, said Marie Persichetti , chief financial officer at AutoNation Finance. Persichetti has worked with Butler dating back 25 years in various financial services roles. She joined CIG Financial in 2015. “Jeff can see the situation unfolding in advance and anticipate what the needs of the business are going to be,” Persichetti said. “He has great vision and the ability to articulate the vision so that people, regardless of their skill set and understanding, can understand what he's talking about.” AutoNation Finance over the next three to six months is looking to expand the volume of positive decisions that are automated while continuing to lean on machine learning and artificial intelligence, Butler said. “Historically, our underwriting has been more manual on the approval side,” he said. “We automate about 10% of the positive decisions that we make, and we want to grow that number.” Despite now running a larger business at AutoNation, Butler’s leadership style has remained consistent, Persichetti noted. “’Approachable’ is the word that always comes to mind for me with Jeff. It doesn't matter whether you are in the field or in the office, he's approachable,” she said. “People can talk to him about anything and he's good about taking the time to hear them out. He may not agree with people all of the time, but he's patient about listening to what they have to say and expressing why he either agrees or doesn't agree or what his vision might be.” -- Amanda Harris Jim Vagim: Forged in fire In 2008, Jim Vagim , chief executive officer of United Auto Credit Corporation (UACC), was tasked with rebuilding UACC from the ground up after the lender’s market capitalization plummeted from $120 million to $10 million during his first day on the job as president. Now, 14 years after rebuilding the subprime lender, he has been tasked with a new challenge of creating a captive with e-commerce retailer Vroom . [caption id="attachment_57332576" align="alignleft" width="212"] Jim Vagim, CEO, UACC [/caption] Vagim thrives on crisis management and is at his “very best” when everything around him is on fire, he told AFN. “We started the company again with $10 million,” Vagim said. “No lender would talk to us, we were radioactive. We were able to get a $25 million loan from Wells Fargo [Preferred Capital], and we started loaning that one little bit at a time and over the course of 14 years the company got back up to a billion-dollar portfolio.” Vagim and UACC find themselves facing a new challenge, integrating UACC with Vroom to create captive financier Vroom Financial Services . UACC became a wholly owned subsidiary of Vroom in February upon the closing of a $300 million deal which was first initiated in Oct. 2021. Since the acquisition, Vroom began scaling UACC-originated loans during the second quarter and UACC has closed two auto asset-backed securitization (ABS) deals. The first deal came in February , totaling $296.2 million, and the second deal came in July totaling $255.1 million . The lender will continue to execute in capital markets when it’s appropriate for UACC as liquidity is everything in the business but is very expensive during this time, Vagim said. “Capital markets come and go; they're fickle,” he said. “We've seen these markets … we've seen this play out before, and time is our friend. I think that right now liquidity is an even bigger friend.” UACC is still in the early stages of managing Vroom’s auto book, Vagim said, noting future goals going include the continued build-out the captive by completing technological integration with Vroom and learn from the prime lending on Vroom’s portfolio. “UACC has been focused just on credit of a subprime and non-prime environment. Vroom is a prime, near-prime [and] super-prime dealer. We have the opportunity to learn from that business, and then take that back to our dealer body on the independent business and be more impactful to that dealer’s bottom line.” — Jim Vagim When it comes to leadership, Vagim considers himself to be a servant leader who is driven by the success of the people around him, he said. He prioritizes the mental health and wellness of his employees because he wants them to enjoy the job they are doing and understand the bigger mission of the company to help it succeed, he noted. “Jim is incredibly high energy,” Bruce Newmark chief operating officer at UACC told AFN . “He has always had a desire to have people flourish in their environment, and he is big on coming up with ideas for how we’re going to better the business and better our people.” During the COVID-19 pandemic, Vagim started an initiative at UACC to provide educational resources to employee’s children while they were stuck at home, Newmark said. Vagim helped bring in certified teachers who built curriculum and organized study halls to help the kids learn from home while their parents were working, he noted. “The general theme [with Vagim] is really about how to not only better people’s stations in life, but our business as well,” Newmark said. -- Riley Wolfbauer Auto Finance Summit East, Auto Finance News’ new spring event, kicks off May 10-12 at the JW Marriott Nashville. 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