Auto Credit Express Blog
August 5, 2008
HSBC Discontinues Indirect and Direct Auto Lending to Consumers
In a recent SEC filing, HSBC noted that a decision was made in July to discontinue new motor vehicle loan originations from the dealer and direct-to-consumer channels. These changes will take effect on August 6th.
Decision to affect dealers in 39 states
Back in March of this year, HSBC pulled out of 9 states including 8 in the Northeast as well as Michigan. At that time, customers in the affected states were still able to secure an auto loan online at the HSBC website.
The latest news is not totally unexpected, given the fact that HSBC has, for some months now, been cutting back on loan originations in the remaining states that it services. According to the recent filing:
“In March 2008, we decided to reduce the size of our Auto Finance business which has historically purchased retail installment contracts from active dealer relationships throughout the U.S. We discontinued our dealer relationships in several select states, primarily in the Northeast, and discontinued certain product offerings. These actions are expected to significantly reduce our new loan origination volumes.”
The filing goes on to state:
“In July 2008, we decided to discontinue new auto loan originations from the dealer and direct-to-consumer (website) channels. We will honor all outstanding loan commitments to our customers but anticipate that all new originations in these channels will cease within a 90 day period. We intend to continue offering auto loans in our Consumer Lending branch offices through the autos-in-branches program until we establish an alliance with a third party provider who will originate these loans going forward.”
Lending to continue in branch offices
According to sources at HSBC, this decision will take effect on August 6th. The consumer lending branch offices that will continue to offer auto loans consist of approximately 900 local HFC offices as well as Beneficial Finance offices located in the U.S.
August 5th, 2008 at 11:50 am
Steve,
Spoke with HSBC PR this a.m. They said they will continue to offer direct auto lending through their branch offices, only until they find some third-party to take it over.
As of June 30, 2008, HSBC had a $12.5 billion portfolio in auto finance receivables.
Peter Salinas