is not actively seeking to reduce exposure to subprime autoloans, but its origination mix matriculated up-market to a certain extentduring the first quarter nonetheless.
"Marketsremain competitive for assets in our core retail nonprime business," CEOJason Kulas said during an April 27 conference call. "However, we believethere are pockets where we can capitalize on opportunities to optimize capturerates while balancing risk and return."
SantanderConsumer reported $2.61 billion in total core retail auto originations duringthe first quarter, down from $3.07 billion in the year-earlier period. Totaloriginations, which include leases and loans produced through the private-labelChrysler Capital platform, fell to $6.78 billion from $7.19 billion.
Loansto borrowers with FICO scores of 600 or lower (or no FICO score at all)accounted for 51% of Santander Consumer's retail installment contractproduction during the first quarter, down from 57% in the year-earlier period.
Kulassaid that the effort to balance risks and returns has had the effect of"impacting our subprime capture." He further explained that from acompetitive perspective, "it seems that the market's willing to be alittle bit more aggressive on certain pockets of those than we are right now.We don't see any concerning overall trend in terms of individual players. But Iwill point out that we're seeing some of the same trends we mentioned in thelast quarter, where in general, the larger players — the most sophisticatedplayers with more data — as a group have lost share to the smaller, maybeless-sophisticated, in some cases less-disciplined, competitors."
Kulassaid Santander Consumer benefits from having "more data than almost anyoneelse in the subprime space," so it is comfortable with booking theassociated risk when it can do so at an appropriate price. Relative to the mixof originations by credit band, he said, future quarters could produce "adifferent result."