Chrysler Financial Could Serve as Platform for New Bank

Chrysler Financial may allow Cerberus to create an independent financing company

Even though Chrysler received money from the United States government, people are still talking about the company's future, raising questions regarding the short-term market strategy often considered vital for revamping sales. An interesting and potentially live-saving idea comes from John Casesa, an analyst with Casesa Shapiro Group in New York, who said that Chrysler Financial, the current financing firm owned by Cerberus Capital Management LP, can be used as a platform for a new auto financing company.

This could support Chrysler even if the automaker does not sell a single vehicle in the next years, Casesa was quoted as saying by Autonews, as the company will have the capacity to finance itself using customers paying off their loans.

Cerberus Capital Management, who owns 80.1 percent of both Chrysler and Chrysler Financial, may also consider dividing the two companies in order to form a new and independent financing firm particularly focused on automotive creditors. On the other hand, Cerberus is also the majority owner of GMAC Financial Service, so a potential merger between the two companies would really make sense, the analyst explained.

And according to Bill Lovejoy, former president of GMAC, an independent finance company could prove to be very profitable as it may extend its operations to lend money to a wide range of creditors, not only to the ones involved in the automotive industry or interested in a single brand.

“There's no reason you couldn't finance other 'makes,' or snowmobiles, or boats. Would it be valuable? Yes. A financial institution would be very valuable. The problem now is that those guys can't get the funding,” Lovejoy was quoted as saying by Autonews.