NEWs just out for WESTAR! ticker WEST
Westar Financial to Provide $1 Billion Loan and Lease Financing For DriveOff.com
June 10, 1999 06:00 AM
OLYMPIA, Wash., CHARLOTTE, N.C. and DENVER, June 10 /PRNewswire/ -- Westar Financial Services Incorporated WEST announced today that it has agreed to fund more than $1 billion per year of prime credit auto loans and leases originated through DriveOff.com, a new Internet model for automotive commerce opening this summer. Westar has signed a letter of intent with First Union Capital Markets Group to support the venture through a purchase arrangement with Westar for up to $1 billion of loans annually. First Union Capital Markets Group is a part of First Union Corporation FTU . Westar will fund the leases originated through the Web site.
"We view this as a logical, though very substantial, expansion of our emphasis on using high technology to deliver great pricing and service to the consumer while driving our costs down and volumes up. We believe that this 3rd generation of e-commerce is a significant development as we move beyond just providing price information and mere referrals of interested consumers to dealers to actually selling and financing automobiles online," stated R. W. Christensen, Jr., Westar's President and CEO.
According to Forrester Research, the Internet played some part in the purchase of 2 million vehicles in 1998. By 2003, they estimate that 1/2 million vehicles will be sold completely on the Internet. This represents approximately $12.5 billion of the $400 billion annual domestic auto sale market.
"We're interested in revolution rather than evolution. This concept will revolutionize the automotive distribution channel by driving consumer satisfaction right through the roof. At the same time, this is a terrific opportunity for our selected dealers to substantially increase volumes, reduce expenses and take first position in their race to the future," Christensen added.
"We expect that the e-commerce channel combination of high satisfaction levels and aggressive pricing for the consumer will eventually dominate the automotive distribution market. We want Westar positioned to seize a disproportionate share of that business. We believe that Westar and DriveOff.com, with their superior systems, technologies, people and services, will do just that. We want the consumer to be the driver, not a passenger in the transaction, in complete control of the timing, the flow and the outcome," Christensen said.
DriveOff.com is designed to empower consumers, allowing them to negotiate new car purchases completely online -- selecting the vehicle, arranging the financing and scheduling the appointment to accept delivery. Until now, consumers have only been able to inquire about automotive purchases on the Internet. They have not been able to negotiate a firm deal, including financing, online.
Consumers using DriveOff.com are not only provided with firm prices for the selected vehicle, but they also control the bundled transaction from start to finish, including financing, from their computer. Financing information at DriveOff.com is real-time, providing on-the-spot credit review and approvals, firm prices on market rate loans and leases for the specific vehicle the consumer has chosen. As the financing administrator for DriveOff.com, Westar will originate, underwrite, document and fund the financing for the automotive transaction.
"We chose Westar to be the financial administrator for DriveOff.com, because of their financial capacity, technical capability and competitive drive," stated Michael Kranitz, President of DriveOff.com, Inc., a wholly-owned subsidiary of Navidec, Inc. NVDC . "Westar is a fast-growing, highly-innovative and strongly competitive force in the automotive industry. Westar has developed the systems and technological sophistication to handle the high volume of transactions we expect and manage the details with a very high commitment to service to the consumer."
The parties are negotiating agreements which, if executed, will provide for First Union Capital Markets' support of the venture through committed warehouse lines and a loan purchase arrangement with Westar for up to $1 billion per year. Westar will serve as the exclusive financial administrator and underwriter for leases and loans originated by DriveOff.com and its affinity sites. Subject to the execution of these agreements, First Union will fund loans, while Westar will fund the leases. "We expect that the $1 billion per year funding arrangement from First Union should provide adequate funding for the initial volume of loans anticipated," Christensen noted. "We will use our other sources of capital to fund for our own account the leases we originate, which should be more than one quarter of total originations."
"The venture brings unique strategies to the business of selling and financing cars through technology," said Sal Mirran, managing director in First Union's Capital Markets Group. "We are excited about the opportunity to provide funding for the loan originations."
Beginning this summer, DriveOff.com will implement its world-class technology to provide consumers with guaranteed pricing and monthly payment quotes on the fly. After viewing an initial quote, consumers can alter important aspects of their deal, including down payment, term length, mileage allowed on leases and even credit rating. This provides an exciting and easy way to compare actual leasing and financing options on their new vehicle.
"The DriveOff.com integrated technology system takes the mystery out of pricing and budgeting for a new vehicle -- what you see is what you get," said Hal Anderson, vice president of technology for DriveOff.com.
Visitors to the site who complete an online credit application will receive a credit decision in less than one minute, on average. Once they select a deal, consumers can visit their own secure Personal Auto Center from which they can monitor or change vehicle and financing preferences or interact with a DriveOff.com customer service representative.
After collecting a deposit from the consumer, DriveOff.com will either order the vehicle or locate it using the company's proprietary Data Harvester application. The Data Harvester allows DriveOff.com to securely access dealers' back-end systems and browse current dealer inventory located anywhere in the United States. DriveOff.com then delivers a complete closing kit to the consumer via overnight mail.
The closing kit includes a "DriveOff Draft" covering the full amount of the vehicle along with all documents needed to complete the transaction. The consumer can leisurely review the closing documents before picking up the vehicle. While the deal terms are finalized with DriveOff.com prior to vehicle delivery, a participating dealer still meets the customer in person to deliver the vehicle.
"Through extensive consumer and dealer research, we recognize the importance of providing consumers with a friendly neighborhood place to service their vehicle after the purchase -- who better than the franchise dealer from which they picked up the car to provide this," said Kranitz. "There is great value and efficiency in the existing dealer infrastructure. Therefore, we have no intention of acquiring and shutting down any dealerships which would leave consumers without a committed service source."
DriveOff.com Inc. has more than three years experience providing cutting-edge solutions to the online automotive marketplace. DriveOff.com will draw content and technical performance from the company's nationally acclaimed USWheels, CarWizard and LeaseSource applications. These products currently are used by CBS: CarWizard.com, Excite.com, Netscape.com, Prodigy.com, WebCrawler.com, TheCarConnection.com and WomenMotorist.com. DriveOff.com Inc.'s automotive content and tools are widely recommended and referenced in media outlets including CNN, Fox News, USA Today, Consumer Reports, The New York Times and Automobile Magazine.
"Westar will continue our relationship with Bank One ONE , which provides warehouse lines and securitization facilities to fund the leases we originate through our Dealer-Direct Retail Leasing(TM) program in the Pacific Northwest and Southwest," added Christensen. Westar, which originated in the Pacific Northwest, opened a Southwestern Region in December and has announced it will continue its geographic expansion into the north central states this summer.
DriveOff.com Inc.
Based in Englewood, Colorado, DriveOff.com Inc. is a wholly owned subsidiary of e-business provider, Navidec Inc. DriveOff.com Inc. provides the market with world-class auto buying and information web sites including DriveOff.com, USWheels.com, CarWizard.com and LeaseSource.com. Expected to launch this summer, the company's premier web site, DriveOff.com, partners with a national dealer cooperative to allow consumers to complete their entire vehicle transaction by visiting the site. The company's corporate web site is located at driveoff.com.
First Union Corporation
First Union is a leading provider of financial services to more than 16 million customers throughout the East Coast and the nation. At March 31, 1999, First Union had assets of $223 billion and total stockholders' equity of $16 billion. Through its banking subsidiaries, the company operates full-service banking offices in Connecticut, Delaware, Florida, Georgia, Maryland, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, Virginia and Washington, D.C.
Westar Financial Services Incorporated
Westar Financial Services Incorporated is an innovative, fast-growing, Washington-based automobile financing company. It has focused solely on the prime-credit segment of the $110 billion auto-lease finance market and has completed ten securitizations of auto lease receivable certificates for the prime credit market. WEST is the only publicly-traded automobile lease finance company focused solely on this huge market.
Statement regarding "Forward Looking Statements": Statements concerning future performance, developments or events, including the ability to penetrate new markets and capture market share, gain product acceptance, achieve technological success, or any other guidance on future periods, constitute forward-looking statements which are subject to a number of risks and uncertainties which might cause actual results to differ from stated expectations.
SOURCE Westar Financial Services Incorporated
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