SAN FRANCISCO –
Wells Fargo closed 2019 by holding 3.67% of the auto-finance market, according to data from Experian Automotive shared exclusively with SubPrime Auto Finance News. That market share positioned the bank to rank sixth in Experian’s data set.
But the decision Wells Fargo made to stop accepting financing applications from many independent dealerships might make it difficult to hold that market share position.
The bank confirmed other media reports in a statement to SubPrime Auto Finance News about reducing its business dealings with independent stores.
“Like lenders across the country, we are doing everything we can to help customers weather the economic impacts of this health crisis, including offering loan deferrals to customers who need them if they’ve been impacted by COVID-19,” Wells Fargo said in the statement.
“As a responsible lender, we also have an obligation to review our business practices in light of the economic uncertainty presented by COVID-19 and have let the majority of our independent dealer customers know that we will suspend accepting applications from them,” the bank continued. “The independent dealers we will continue doing business with are those with deep, long-standing relationships with Wells Fargo.”
Wells Fargo’s decision was initially reported online here by CNBC. The bank’s action also arrived as the institution’s portfolio made gains during the first quarter.
Wells Fargo reported that its automotive portfolio rose $3.7 billion year-over-year during the first quarter and $695 million on a sequential basis. The bank also highlighted that Q1 originations climbed 19% year-over-year “reflecting a continued emphasis on growing auto loans following the restructuring of the business.”
But those Q1 originations also softened 5% from the fourth quarter, “reflecting a slowdown in March due to COVID-19,” according to the Wells Fargo.
Wells Fargo reducing its interaction also arrives at a time when independent stores stilled are trying to get their business back in motion completely despite the ongoing coronavirus pandemic, according to the latest survey by the National Independent Automobile Dealers Association.
The NIADA COVID-19 Dealer Impact Survey of 846 independent operators conducted from May 9-14 — a follow-up to a survey orchestrated by NIADA a month earlier — found 63% of the dealerships that had furloughed or laid off employees a month earlier have started the process of bringing them back.
Overall, NIADA indicated 34% of the independent dealers said they are rehiring staff, 20% said they are not and 47% said the question was not applicable, meaning they had remained at a full-staffing level throughout the COVID-19 pandemic That was the same percentage as the previous survey.