Wells Fargo & Co.’s renewed push into the auto finance space is likely driven by a desire to fund higher yielding loans in a rising interest rate environment, one dealer told Auto Finance News.
Wells Fargo Chief Executive Tim Sloan announced the bank’s intentions in the space earlier this month. “We’ve pulled back enough, and now we’re going to be growing that business again,” Sloan said in an interview with Bloomberg.
Saif Kadri, sales manager of Carson Nissan, believes Sloan’s decision is sparked by rising interest rates and a desire to compete with lenders whose subprime portfolios have begun to outpace Wells Fargo’s. “You make the most interest from people with bad credit,” Kadri said. “So [Wells Fargo Auto] wants to go back to that.”
Although a more aggressive Wells Fargo “gives us another avenue” to fund, Kadri said, the Carson, Calif., dealership most often finances with Nissan Infiniti Financial Services, Capital One Auto Finance, Chase Auto Finance, and Ally Financial.
Wells Fargo Auto plans to increase automation and improve pricing transparency while operating within the enterprise tolerance for risk in its steps to transform operations, said Mary Mack, the bank’s senior executive vice president of community banking and consumer lending, during a May 10 Investor Day presentation. Additionally, Wells Fargo is looking at a wide set of aftermarket products to “improve processes for our consumer and dealer customers,” a spokeswoman said in a published article.
Wells Fargo financed 47,839 vehicles in April, down 11% from volume in April 2017, according to Experian AutoCount data. Additionally, first-quarter auto originations were $4.4 billion, a 20% year-over-year decline.Like This Post