When it comes to buying cars, automakers typically prefer to have people by their car and finance in-house. All major automakers, save one, have their own in-house financial arms. The lone automaker who doesn’t do its own financing is Stellantis.
However, that is set to change. A new report has surfaced claiming that Stellantis has agreed to pay $285 million to investors led by Gallatin Point Capital and Jacobs Asset Management, with the deal set to close by the year. The purchase will give Stellantis its own financial arm helping it rival GM, Ford, and others.
Stellantis CEO Carlos Tavares says that ownership of a finance company will allow it to provide a complete range of financing options to customers and dealerships. In addition, in-house financing is particularly profitable for automakers. For instance, Ford Credit is doing particularly well helping Ford to meet its dividend during the pandemic.
One downside of Stellantis making this purchase is that Chrysler Capital could fall by the wayside. Chrysler Capital was set up as an operation between Chrysler and Santander Consumer USA Holdings Inc. before the merger that created Stellantis. Chrysler Capital will continue to operate, and Santander Consumer has stated that it is having ongoing conversations with Stellantis about opportunities beyond 2023.
Apparently, 2023 is when the current deal for Chrysler Capital comes to an end. Chrysler Capital has financed a significant portion of Stellantis vehicles that were sold through its various brands. The overall total was 33.8 percent of all Stellantis vehicles sold. Chrysler Capital is one of the largest providers of subprime loans for automotive purchases in the US. Subprime loans are made to consumers with poor credit ratings who don’t qualify for the best deals.