On Jan. 4, Wells Fargo Dealer Services entered into a multiyear commitment with General Motors to offer a subvention program to the carmaker’s dealers. But that’s not the only move the company is making this year.
Together since their days at WFS Financial and then Wachovia Dealer Services, the executive team driving the dealer services division at Wells Fargo has the bank firing on all cylinders. Not only is it one of the Top 5 finance sources in the industry, it has played a crucial role in fueling the resurgence of the auto finance industry.
Previously led by Tom Wolfe, who now heads up the new Wells Fargo Consumer Credit Solutions, the dealer services team includes Bill Katafias, national indirect production manager, Jerry Bowen, commercial executive vice president, and Dawn Martin Harp, who is replacing Wolfe as president of the dealer services division. They sat down with F&I and Showroom magazine to talk about the industry and their new approach to the consumer lending market.
F&I: General Motors now has you, GM Financial, Ally and U.S. Bank. How is that going to work?
Katafias: GM is diversifying its financing options. Our relationship is consistent with GM’s strategy to ensure their dealers and customers continue to have competitive financing alternatives throughout all economic and credit cycles. Our relationship includes retail and wholesale financing in the West region.
F&I: After what we went through during the credit crisis, diversification seems like a smart way to go.
Katafias: And that’s the thinking over at GM. We believe that’s a logical, smart business plan and it makes sense for us to participate in it.
Wolfe: We’ve also been the largest used-car lender in the nation for the last several years, which I think helps us penetrate the new-car side under this relationship.
F&I: The deal with GM also means you’ll be doing floorplanning, correct? It seems like that side of the business is making a comeback.
Bowen: Yes, we will be doing floorplanning and offering other dealer financing products as well. There’s a lot of available capital in the marketplace for dealers right now. As banks continue to improve on the liquidity side, they’re looking for attractive places to put it to work.
Right now, I think dealers are looking to see who was here when things were tough — or who got out. They’re also being pretty prudent in assessing who has capital and the capability to deal with and support their organization. Hopefully, that’s where we look pretty attractive to dealers.
Wolfe: One of the strengths of Wells Fargo Dealer Services is our focus on the dealer as our primary customer. We offer products and services aligned with the needs of the dealer, including indirect financing, commercial services, and insurance services through Warranty Solutions.
We are now taking that customer-centric approach to Wells Fargo’s consumer lending products and services. I am now heading a new business group called Consumer Credit Solutions within Wells Fargo that combines our non-real estate consumer lending businesses together. It includes credit cards, student loans, automotive, and retail services.
This new business group enables us to leverage best practices, deliver consistent customer service, improve accessibility to credit, and make it easier for our customers to do business with us.
F&I: How does this change things for your team?
Wolfe: Now that I head up Consumer Credit Solutions, Dawn will lead the dealer services business and be a part of my management team. Bill handles all indirect loan production and the GM subvention relationship, and Jerry still has the commercial business.
F&I: Sounds like you’re strengthening that community-bank feel Wells has been known for.
Harp: That’s the secret sauce, and we continue to service our dealers with 53 regional business centers across the country.
F&I: Tell our readers a little bit about yourself, Dawn.
Harp: I’ve been with this team for 14-and-a-half years. I served as the chief information officer at WFS Financial before we merged with Wachovia. When we were purchased by Wells Fargo, I took over as the chief operating officer. So, this management team has been together for a long time.
F&I: I take it the new strategy will be especially helpful as the industry continues to court younger buyers.
Wolfe: I refer to our approach as the “graduation strategy.” As consumers graduate through different stages in life, we want to be there with them all the way. We want to be there when they’re making those important decisions in their life, and provide them with products in an easy way. We want to be their bank all the way through that cycle.
F&I: What are some things you’re doing to engage Gen Y?
Katafias: Right now, manufacturers are working in conjunction with dealers to connect with Gen Y. And we’re working alongside them. So if you have a virtual F&I office where a customer is applying through the Internet at midnight and it’s coming in through the dealership, what can we do to support that so there is a streamlined decisioning process for the customer when the dealership opens up the next day? Right now, the dealers and the manufacturers are taking the lead, but we’re having dialogue with both to see how we can support them.
F&I: It seems like most industry soothsayers are predicting anywhere between 13.5 and 15 million units this year. Where do you stand?
Wolfe: Obviously, the first quarter was much better than we expected, so that was a little bit of a surprise. What’s the momentum? What’s the demand? How does confidence play? It’s also an election year, so I always wonder how the confidence will swing. I think the industry believes it will be a better year than last year, at least from the new-car sales perspective. Used cars are still at very high values, and they’re probably going to stay there for the rest of the year.
Bowen: When you look at all the economic factors related to unemployment rates and growth rates, although they’re not good, I think people feel a lot better about the current environment. They know we’re not going to go from 8 percent to 12 or 15 percent unemployment. The numbers are starting to stabilize, and people are now thinking, “If this is the new norm, I can get comfortable.”