Toyota Financial Services is issuing more contracts for protection products than financing as it tries to both extend its lead as the top U.S. auto lender and complete its corporate move from California to Plano, Texas.
"Our insurance business has grown quickly in recent years," Mike Groff, CEO of Toyota Financial Services, said in a phone interview. "We actually wrote more insurance contracts than loans and leases last year."
In calendar year 2016, the captive finance company issued 2,031,000 insurance contracts and 1,469,315 retail loans and leases on new and used vehicles, he said, although financing still accounts for the bulk of the lender's revenue. Total assets reached $117.6 billion in 2016, up 2 percent from $115.3 billion in 2015.
Groff, 62, acknowledged that other auto lenders are altering lending practices as interest rates rise. But Toyota Financial Services' solid credit rating and relatively upscale customer base enables it to stick to its growth strategy without significant changes, at least for now, he noted.
He expects continued revenue growth in 2017 even as Toyota Financial Services will complete moving its U.S. headquarters from Torrance, Calif., to suburban Dallas. Most of the company's staff is housed in temporary offices in Plano but will move the final mile into the new Toyota complex in mid-July.
Groff has been working on the relocation since 2014, shortly after he took over as head of Toyota Financial Services in 2013. About two-thirds of the company's employees decided to make the move from southern California to northern Texas. It will end up hiring about 1,500 new employees, he said.
More than half the new employees are in place now and Groff hopes to be up to full strength of 4,000 by year end.
Groff credited "employee pride in our brand," Texas housing affordability and great cooperation from local communities for making the relocation move more quickly than expected.
"We decided it would be better to start moving from California earlier than planned" and so Toyota Financial Services located and leased short-term office space in Plano, he said. Most of the captive's Texas employees are on two floors of a building near the new Toyota complex and others share temporary space with Toyota Motor Sales workers nearby. "The locals have been terrific" in welcoming Toyota and its employees, he added.