Stellantis has announced plans to buy the parent company of First Investors Financial Services Group for approximately $ 285 million with the intention of creating a U.S. captive financial firm.
“This transaction marks an important step in Stellantis’ sales financing strategy in the critical US market,” Stellantis CEO Carlos Tavares said in a statement Wednesday evening. “Direct ownership of a finance company in the United States is a white space opportunity that will allow Stellantis to provide our customers and dealers with a full range of financing options, including personal loans, leases and financing on a short or medium term plan. . “
Stellantis expects the spot transaction for F1 Holdings Corp. be concluded by the end of the year.
The company said it was the only “major” automaker without a U.S. captive finance company. Its Chrysler Capital financing and insurance program involves a private label partnership with Santander Consumer USA Holdings.
Stellantis spokesman Kevin Frazier wrote in an email that the automaker expects Santander to continue serving dealers and customers “at least until the end of the existing contract with SCUSA.” . This agreement expires on April 30, 2023.
“SCUSA has been an important partner for Stellantis, and we are open to a mutually beneficial relationship beyond the term of the existing agreement,” wrote Frazier.
Santander said he was open to the prospect as well.
“We are committed to supporting Stellantis through the life of our existing agreement and its transition, providing Stellantis resellers and customers with the same superior service they have come to expect,” Santander said in a statement. “We also look forward to ongoing conversations with Stellantis on long-term mutually beneficial opportunities beyond 2023.”
Santander touted the strength of its business, with a network of around 14,000 dealers.
The purchase of First Investors and the creation of a captive “represent a significant strategic opportunity, with significant potential for generating accretive earnings and improving customer loyalty,” Stellantis said in its statement.
First Investors CEO Tommy Moore said in a statement, “We believe there are significant untapped growth opportunities for First Investors under Stellantis ownership as we expand our product line to support the growth of companies. Stellantis auto sales. “
Santander in July said Chrysler Capital recorded a penetration rate of 34% in the second quarter, down 3 points from the previous year. It reported $ 4.6 billion in Chrysler Capital loan origination in the second quarter, up 2% from the previous year.
The private-label finance company produced $ 2.1 billion in lease arrangements, more than double the tally for the April-June 2020 quarter, which was marred by COVID-19 closings.