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FCA To Pursue Creation Of A Captive Financing Arm:

FCA Is The Only Auto Company Operating In The U.S. Without Their Own Financing Arm...

As part of the FCA 5 year plan unveiled last Friday, there we a few slides titled US Finco opportunity. Currently FCA is the only automaker selling vehicles in the North American market without their own financing arm. In the United States FCA is currently partnered up with Santander Consumer and in Mexico FCA is partnered up with Banco Inbursa. These are white label agreements in which the actual financing is provided by the respective banks instead of FCA, while FCA gets to rebrand those products under the name Chrysler Capital.

In Canada FCA has bank agreements, typically with the Toronto Dominion Bank of Canada in which the financing is provided by the bank and not rebranded at all.

FCA financing
FCA captive finance slide (FCA Group)

As part of the 5 year presentation FCA announced that they are looking at the possibility of creating a captive financing arm in the North American market. This would be done either through an acquisition or through a startup. FCA sees this as an opportunity to increase their financing share in the US market as the Santander rebranded Chrysler Capital only achieved a 26% share of financed deals in 2017 compared to a 50-75% share typically seen by a captive financing arm.

Creating a new financing arm would also help to increase FCA profits in new ways and potential profits are not included in the 5 year plan business targets but represent a further opportunity.

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