MILAN: Stellantis NV is buying Houston-based auto lender First Investors Financial Services Group to set up its own captive-finance arm in the United States, supporting its sales and potentially boosting profits.

       Stellantis, which is the only one of the major traditional automakers in the US without its own captive finance arm, agreed to pay US$285mil (RM1.18bil) to a group of investors led by Gallatin Point Capital and Jacobs Asset Management, it said in a statement.

       Formed via the merger between Fiat Chrysler and PSA Group early this year, the automaker’s US operations had long sought to control its own financing. Carlos Tavares, who took the helm of the combined company as chief executive officer in January, called the deal to acquire First Investors “a milestone” that will enable it to increase earnings and enhance customer loyalty.

       “Direct ownership of a finance company in the US is a white-space opportunity which will allow Stellantis to provide our customers and dealers a complete range of financing options, including retail loans, leases, and floor-plan financing,” Tavares said in a statement.

       Having an in-house finance company has helped rivals like General Motors Co and Ford Motor Co pad profits, especially during the global semiconductor shortage that has limited production and crimped sales.

       The acquisition could spell trouble for Chrysler Capital, the operation that Santander Consumer USA Holdings Inc and Chrysler set up in 2013 before the US automaker completed its merger with Fiat.

       “We are committed to supporting Stellantis through the term of our existing agreement, and its transition, providing Stellantis dealers and customers with the same superior service they have come to expect,” Santander Consumer USA said in a statement. The company will also have “ongoing conversations with Stellantis about long-term mutually beneficial opportunities beyond 2023.”

       Santander Consumer USA said its consumer business remains strong and has “delivered solid results for our shareholders.” This, along with support from its parent company, will let it “pursue additional opportunities as they arise.”

       The lender’s US-listed stock fell 1.5% in New York trading Wednesday after Bloomberg reported Stellantis was preparing to announce a new finance partner.

       Stellantis shares rose less than 1%.

       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.

       It had a similar agreement with Ally Financial Inc before that expired eight years ago. The former Chrysler LLC lost its own captive financing arm as part of its emergence from bankruptcy in 2009.

       First Investors Financial Services Group is one of the many small, non-bank auto lenders that have increasingly dominated the deep subprime market for car loans in the US. It targets customers through dealers and pre-approved offers via direct mail. ― Bloomberg