Stellantis to acquire First Investors Financial Services to develop an In-House captive finance company for U.S.

[AlexB]

AMSTERDAM, September 1, 2021 - Stellantis N.V. (NYSE / MTA / Euronext Paris: STLA) (“Stellantis”) today announced it has entered into a definitive agreement to acquire F1 Holdings Corp., parent company to First Investors Financial Services Group (“First Investors”, or the “Company”), a leading independent auto finance company in the United States of America, in an all cash transaction for approximately $285 million, subject to adjustments for closing balance sheet and certain outstanding options (the “Transaction”) from an investor group led by Gallatin Point Capital LLC (“Gallatin Point”) and including affiliates of Jacobs Asset Management, LLC.

Carlos Tavares, CEO of Stellantis, said: “This transaction marks a significant milestone in Stellantis’ sales finance strategy in the critical U.S. market. First Investors has an outstanding financial and operational platform, underpinned by a strong management team, with vast experience in the auto finance space. Direct ownership of a finance company in the U.S. is a white-space opportunity which will allow Stellantis to provide our customers and dealers a complete range of financing options, including retail loans, leases, and floorplan financing in the near-to-medium term.”

''Stellantis’ strategic objective is to establish a U.S. captive finance company to support its sales and fully capitalize on its strong market position while creating long-term value for Stellantis shareholders. The acquisition of First Investors allows Stellantis to create a platform from which to grow a full-service captive finance organization. Stellantis is the only major OEM currently operating in the U.S. without a captive auto finance company. The transaction represents a meaningful strategic opportunity, with significant potential for accretive earnings generation and improving customer loyalty. A captive U.S. finance company will enhance the ownership experience and connectivity in the digital age for customers who purchase its award-winning Jeep®, Ram, Dodge, Chrysler (CGC-OLD), Fiat (FIAJF) and Alfa Romeo vehicles, and provide future opportunities to enable emerging business strategies;;''

Stellantis to Acquire First Investors Financial Services Group as Key Step to Developing a Captive Financial Services Business in U.S. Market

seekingalpha.com

Having an In house Captiva is important if RAM is going to go-head-to-head in volume with F-Series. The Santander partnership (Chrysler Capital ) can't do certain incentive leasing/financing that Ford does with Ford Credit which is why Sergio wanted to move away from Santander before his death .

 

[cgseller]

Can someone clarify this quote

During the last quarter, which ended in June, Chrysler Capital stated that it financed 33.8% of Stellantis’ vehicle sales in the United States during that time. That means that Santander is one of the biggest providers of loans to those who borrow with less-than-perfect credit in the U.S.

Does CC only lend to those with lower credit scores or low asset to debt ratio ?

 

[bill burke]

As a Stellantis investor I am more confident in my return on that investment in the long term. This acquisition is another step forward, apart from vehicle development, that signals maturity of the company to a global corporation of serious intent and capability. This merger has given the Chrysler Group much greater assets to lead the domestic market with a full range of brands and vehicles that was unachievable before. Along with the news out of Brazil my spirits of financial security have been lifted. Now, when are my new Chrysler’s coming ? I’m riding on a Mopar high today.

 

[AlexB]

Can someone clarify this quote



Does CC only lend to those with lower credit scores or low asset to debt ratio ?

No:, that 'quote'' is from David Welch, a reporter that tend to carry GM's water.

He conflates two different things.
First Santander has large used vehicle financing business (think ''unaffiliated dealers'') that is large on subprime vehicle loans.
That has nothing to do wth the Stellantis.

The second thing he is conflating is kind of perception related. Me and @TripleT in many of different postings have mention the 2015 change in direction. The retail buyers who purchase RAM Single-cab ,Journey ,Darts ,Avengers, 200, Grand Caravan, Patriot, etc tend to need more risker lending vs the rest of the U.S. New Auto market. Obviously with the 2015 direction in North America this no longer the case.

 

[ChargerFan1]

The issue with this is they can make more money off the financing than the cars themselves, its why Sergio scrapped it and voila, the cars got better 10 fold. Nobody has ever had an issue financing a chrysler, the F&I guy inputs your info and about 15 banks pop up with their rate begging for your business - this is not a good thing.

 

[AlexB]

The issue with this is they can make more money off the financing than the cars themselves, its why Sergio scrapped it and voila, the cars got better 10 fold. Nobody has ever had an issue financing a chrysler, the F&I guy inputs your info and about 15 banks pop up with their rate begging for your business - this is not a good thing.

In case of Honda in the recent decade that’s true (more made leasing/financing vs manufacturing vehicles).
That won’t be the case (for Stellantis) given the billions Stellantis will invest and billions to fund the it. Stellantis has high strong margins profitability so that case won’t happen.

It wasn’t Sergio’s decision to not to have a in-house financing company:it Was Daimler’s when they ”scraped” Chrysler Financial of many of its assets & infrastructure leaving behind “straps” for Cerberus whom immediately pull back on financing because the “straps” called Chrysler Financial wasn’t funded & didn’t have proper liquidity.

Government bailed out Chrysler Financial so they could continue Wholesale/Floorplan/Inventory lending while transitioning to GMAC/Ally Financial