Chrysler is evaluating options in the event it does not renew a partnership with Ally Financial to finance dealers and consumer loans, Reid Bigland, Chrysler's sales chief and CEO of the Dodge brand said Tuesday.
Chrysler began its relationship with Ally Financial when it was formed in 2009 after the Auburn Hills automaker wound down its own finance company. The automaker's agreement with Ally expires in about a year.
"They are our preferred partner for the foreseeable future. It's too premature to comment on other alternatives we are considering," Bigland said.
Bigland's comments follow reports that the U.S. Treasury Department, which owns 74% of Ally, is pushing for a breakup and sale of the company's assets. One possibility is to sell Ally's auto finance business back to General Motors. Last year, Ally financed about 80% of GM's North American dealer inventory and 38% of the automaker's North American retail sales.
Last year, Ally was preparing to go public. But it later halted those plans because of potential investors' concerns about Residential Capital, an Ally subsidiary that is one of the nation's largest residential mortgage lenders and servicers.
"I think there are endless options that are out there right now in this credit environment," Bigland said Tuesday.
Ally finances Chrysler car loans when it offers incentive programs. It also provides car loans to Chrysler customers through independent dealers.
In the fourth quarter, 6% of Ally's business came from Chrysler loans governed by its contract with the automaker but provides other loans to Chrysler buyers through business beyond its deal with the company.
"We have a very constructive relationship with Chrysler and its dealers," said spokeswoman Gina Proia. "It's certainly a relationship we would of course like to continue."
Bigland, who spoke at the an industry forum sponsored by the National Automobile Dealers Association and consulting firm IHS, said Chrysler has been able to become the fastest growing automaker in the U.S. without a captive financing arm.
Still, over the long-term, Bigland acknowledged that there are risks to not having a captive financing arm.
"I don't think there is a significant risk that out there of not having a captive the way the credit markets have opened up," Bigland said. "I think for certain we will have preferred partners going forward."
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