VW Expanding European Car Finance

Even though Volkswagen AG is the largest automaker in Europe, it is still attempting to increase customer loyalty. It plans to offer ten percent more Audi, Skoda, Seat, and VW car loans and leases within the next four years. According to company financial unit leader Frank Witter, finance customers exhibit more loyalty.

In 2011, the automaker leased or financed 30 percent of its vehicles. By 2015, this figure will increase to 40 percent, allowing VW to further penetrate European markets. Last year was a good one, with a 14 percent increase in global sales companywide.

Eleven percent growth in Germany and seven percent in the remainder of Western Europe were partially responsible.

Selling a vehicle on finance offers a time window to discuss new models with the customer. Thirty percent of VW-backed European cars are leased and 70 percent financed. At the end of 2011, Volkswagen Financial Services had a balance sheet of 90 billion euros, an increase from the June figure of 87.8 billion.

It plans to grow its customer deposit percentage from 25 to 33 percent.

Mr. Witter noted that VW is taking a slow approach to growth. The automaker does not plan to expand U.S. financing options for the Audi brand. It does not want to place quality and residual values at risk. Putting many incentives behind a car creates more off-lease value autos, which places additional pressure on vehicle residual values, he said.

Whether European car buyers qualify for car loans through VW or must find bad credit car finance, they will join the ranks of many other satisfied VW owners. VW hopes that the percentage of these happy drivers will only increase in the near future.

New versions of the Audi A6 and the Passat made this possible last year. We can only guess what is in store during the next few years.