Chrysler Group LLC is in discussions with banks to create an in-house lending arm through a joint-venture, which will help them compete in the U.S. auto market. The company hopes that by the first half of 2012 the deal will be on, this means a year before its Ally Financial pact expires.
This deal implies that the banks will provide all financing and Chrysler will be the one that will offer loans and leases to clients, and floor plan financing for dealers to help them order trucks and cars. This deal is quite similar to the one between Fiat SpA, the majority owner of Chrysler, and Credit Agricole SA, back in 2006, where the bank provided the financing and Fiat took care of the dealer network.
Since Chief Executive Sergio Marchionne, the owner of Fiat and Chrysler, took over after Chrysler’s government-funded bankruptcy restructuring in 2009, the company’s improving finances have attracted a lot of attention. The company really hit the market with its slogan “Imported from Detroit” and recently with the acclaimed Clint Eastwood commercial from the Super Bowl, forecasting a 50% rise in annual profit, to $3 billion in 2012.
Taking all these into consideration there is no reason why the banks would refuse a deal with Chrysler, helping them compete in the tough U.S. auto market.