METTAWA, IL - Saying it will focus on its core consumer mortgage lending and credit card business units, HSBC is out of the auto finance business, a company spokesperson recently confirmed.

In its Aug. 4 filing with the Securities and Exchange Commission, the company said the decision to discontinue auto loan originations from its dealer and direct-to-consumer channels was made in July.

The company will continue offering motor vehicle loans through its Consumer Lending branch offices until a third-party provider is arranged. The company added that it will continue to honor all outstanding loan commitments.

“Exiting the business allows HSBC Finance Corp. to focus our strategic attention on our core business, which is credit cards and consumer mortgage lending,” said Cindy Savio, the company’s spokesperson. “Based on the foreseeable market, this was the best option.”

In a letter sent to dealers the same day, the company said a number of potential alternatives were explored. However, the letter stated, stopping originations was the best option available.

“I’d also like to assure you that a number of potential alternatives were explored, including selling the business, but in the end, stopping originations and working the assets out offered the best financial outcome available under reasonably foreseeable circumstances,” the letter stated. “Therefore, HSBC will retain the assets and derive the income from receivables booked as it is contracted and free up capital.”

The announcement comes amid news that HSBC’s North American operations, which it depends on for a quarter of its revenue, posted a first-half loss of $2.9 billion, compared with a profit of $2.4 billion a year ago. The loss contributed to a 29-percent plunge in net profits for HSBC Holdings PLC, Europe’s largest bank by value.

HSBC’s exit from the auto finance market after a 10-year run is expected to impact approximately 600 employees. And according to the memo obtained by F&I magazine, effective Aug. 11, all impacted auto finance employees will receive a minimum 60-day paid notice, and eligible employees will receive severance benefits.

“There has been increased speculation recently about the future of Auto Finance, so I am sure that you are not wholly surprised by this announcement,” stated the letter. “I think it is important to state that Auto Finance is an efficiently run business and has a skilled and valuable team of employees.”

Jack Tracey, executive director of National Automotive Finance Association, said HSBC’s exit marks a significant shift in the automotive finance landscape.

“HSBC has been a major competitor in the auto financing field,” he said. “Any time we lose a player like that, it changes the competitive landscape. It’s tough.”