Stellantis will soon have its own financial arm after years of being the only large US automaker without one. Bloomberg reports that the company is paying $285 million for First Investors Financial Services Group, a Houston-based auto lender.
The company will pay the $285 million to an investment group with the deal set to be completed by the end of the year. Stellantis CEO Carlos Tavares called the deal “a milestone that will increase earnings.”
“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,” Tavares said Wednesday in the statement.
The move puts Stellantis’ lending partnership with Santander into question. In 2013, right before Chrysler merged with Fiat to form FCA, Chrysler partnered with Santander Consumer to form Chrysler Capital, which has been the sole finance arm of the company ever since. But when the merger was completed and FCA had a new CEO in Sergio Marchionne, he had other ideas for a lending arm. From Automotive News:
Fiat Chrysler tried several years ago to pursue a different financial-services strategy. Then-CEO Sergio Marchionne announced in June 2018 that the carmaker intended to establish a captive-finance company either by acquiring Chrysler Capital or another business, or by building one from scratch. The automaker abandoned that effort after Marchionne’s sudden death that year and opted to keep its arrangement with Santander.
As of now Chrysler Capital will continue to operate, and Santander says it will continue conversations about further opportunities beyond 2023.
Santander is known as one of the biggest sub-prime lenders in the industry. Now Stellantis is entering a partnership with First Investors Financial, a company that not only deals in subprime lending but doesn’t exactly have a stellar history. We’ll see if the move leads to additional risky loans.