When Chrysler Corporation was considering setting up its own auto finance company, it sent a memo to its dealers that contained the following:

“Chrysler Group is in private discussions with multiple financial institutions, including Ally, to optimize the financial services offering available to our dealers and customers.”

a. What is an auto finance company?

b. What advantages might automobile dealers gain from using a finance company, rather than a bank, to finance their purchases of autos from the manufacturer and their customers’ purchases of autos from the dealers?

What advantages might customers gain? What advantages would Chrysler gain from setting up its own auto finance company rather than relying on an independent company?