AutoNation CEO Mike Manley: ‘Essential’ to have captive lender

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AutoNation is “aggressively wanting” into restarting a finance firm as a supply of earnings and strategic benefit because it appears to be like to develop its used-vehicle enterprise.

“I believe it is vital for the most important automotive retailer within the nation to have the ability to supply finance by way of a captive the place we are able to tailor-make providers, the place we are able to ensure that the relationships that we construct with our prospects are deep, the place we will be versatile to ensure that we account for various cycles, completely different modifications in shopping for behavior,” Manley said last week on an earnings call. “So I’m strongly in favor of that.”

A captive lender is also vital to competitor Lithia Motors Inc.’s development plans, and different massive retailers are mulling the thought. They’re sometimes revenue facilities for automakers, although Fiat Chrysler, which Manley led as CEO for 2 and a half years, did not have one.

Manley stated he felt it made sense to discover a captive given AutoNation’s quantity and plans to broaden the AutoNation USA platform of used-vehicle-only shops from 10 immediately to greater than 130 by the tip of 2026.

“And I believe that is an space the place, let me say, ‘aggressively wanting’ might be as shut as I might put it proper now, as a result of it is one thing that I believe actually might add worth in a number of methods, not simply from a revenue contribution perspective,” he stated.

Different giant publicly traded teams mentioned the thought of a captive throughout earnings calls this month.

Penske Automotive Group Inc. CEO Roger Penske was requested throughout a Feb. 9 earnings call what alternatives he noticed for his group within the subsequent 5 to 10 years. “We’ve got alternatives so as to add, I believe, a finance firm in some unspecified time in the future, perhaps,” Penske stated.

Asbury Automotive Group Inc. closed on finance-and-insurance product supplier Total Care Auto in December however doesn’t have a captive finance firm. Requested in regards to the risk throughout an earnings call last week, CEO David Hult described Asbury as “within the actually early phases” of finding out whether or not a captive can be worthwhile. “It is too early to inform at this level,” he stated.

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