TD Auto Finance CEO to Retire; Replacement Revealed
By Nick Zulovich, Editor
June 11, 2012
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TORONTO — Late last week, Auto Remarketing and SubPrime Auto
Finance News confirmed retirement and succession plans for TD Auto Finance's
chief executive officer.
Company spokesperson Mohammed Nakhooda indicated that after a 39-year career in the industry, Tom Gilman has decided to retire effective July 30.
"Until his retirement, he's agreed to remain available with us as an important advisor to the TD Auto Finance business," Nakhooda said.
Rising to the CEO position is Paul Clark, who previously was the company's chief operating officer.
"Paul brings experience from both the U.S. and Canada managing businesses that originate loans," Nakhooda emphasized. "He has worked in audits and a variety of different functions across the bank. He'll be key in moving the business forward."
The change in leadership comes as TD Auto Finance has steadily gained market share in the U.S.
According to first-quarter data from Experian Automotive, the company came in No. 10 in the list of top 20 lenders, holding 1.67 percent of the market. That figure is 261 percent higher than a year earlier.
The company holds the same position in terms of market share when looking at Experian's data at used-vehicle loans as well as new-model contracts.
TD Auto Finance held 1.31 percent of the used market as of the first quarter, a 160-percent gain year-over-year. And TD Auto Finance secured 2.35 percent of the new-vehicle market as of March 31, a whopping 499-percent spike year-over-year.
When Experian tallied up the top 20 lenders as 2011 closed, again TD Auto Finance stood out with significant year-over-year gains.
At the end of the fourth quarter of last year, TD Auto Finance broke into the top 10 of all lenders thanks to a 230-percent year-over-year market share gain.
Experian indicated that only one other company posted a triple-digit gain year-over-year. That operation was PNC Bank, which enjoyed a 103.9 percent gain to secure 0.95 percent of the market.
"Our understanding is that TD Auto moved to a national footprint with a very strong dealer network," stated Melinda Zabritski, director of automotive lending at Experian Automotive, when she revealed the fourth-quarter data.
And interestingly, when TD announced its acquisition of Chrysler Financial, this is exactly what the company had set its sights on: ramping up U.S. market share.
Last August in New York, TD Bank's president and chief executive officer declared his belief the company made a wise choice when completing the acquisition of Chrysler Financial earlier in 2011.
Doing business as TD Auto Finance, Bharat Masrani told an investors conference that activity within this division is "going well."
After making a presentation about the bank's interests in the U.S., Canada and beyond, Masrani was asked specifically about the vehicle-lending segment during a question-and-answer session at the Barclays 2011 Global Financial Services Conference.
"It's a very important component of our strategy in the U.S. as I'm sure everybody knows because of the structure of our balance sheet in the U.S. where we have a huge level of funding," Masrani began in response. "It made Chrysler Financial very attractive to our U.S. business.
"It's going well," he continued. "We only closed on the deal in April. We've been very happy with the dealer signups. That has exceeded our expectations. We are seeing good application flows from those dealers."
At that event, Masrani did touch on one part that's given TD Auto Finance some difficulty.
"One part which has been somewhat challenging is the competitive situation, which has resulted in softer margins," the bank boss shared. "But to some extent, by our entry it created a competitive response, which is to be expected. With our funding costs, our size, our profile, you're going to have a competitive response when you're starting out in this business.
"With the benefit of hindsight, we should not be surprised at that, but I see over time, not only with that business to meet our expectations but to exceed those expectations, we have to deliver for our franchised dealers," Masrani went on to say.
Last June, TD Bank Group held a special celebration in Farmington Hills, Mich., to officially announce the launch of its North America auto lending brand, TD Auto Finance. At that time, the company said it was already 25 percent ahead of expectations in signing up U.S. dealers.
"In the last 70 days, we've been able to sign up about 25 percent more dealers than just the 5,000 (which was the initial plan), Gilman told Bloomberg after the June launch.
The company's goal was to become a top 10 auto lender in the U.S. within three to four years. At the time TD announced it was acquiring Chrysler Financial late last year; top management said the plan would be for the new auto brand to focus on prime.
The acquisition gave TD all of Chrysler Financial's processes and technology as well as its existing portfolio of retail assets on both sides of the border.
TD expects that the former Chrysler Financial business could generate a return on invested capital of about 20 percent in three to four years once it is operating at a steady run rate for target originations.
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