- Operating result: 1.9 billion euros (+12.9%)
- Total assets: 157.9 billion euros (+14.9%)
- Portfolio: 16.6 million contracts (+11.4%)
Volkswagen Financial Services have again grown substantially during the 2015 financial year. At this year’s annual press conference, the Chairman of the Board of Management of Volkswagen Financial Services AG, Lars Henner Santelmann reported: “2015 was both an eventful and an outstanding financial year for Volkswagen Financial Services. With a figure of 1.9 billion euros, we achieved the best operating result ever.” Santelmann expressed his delight at the significant improvements in almost all key financial indicators for the financial services business division of the Volkswagen Group: total assets increased to 157.9 billion euros (+14.9%) and the portfolio of current contracts including all joint ventures rose to 16.6 million contracts (+11.4%). Chief Financial Officer Frank Fiedler added: “For the 2016 financial year, we are expecting a very good result again that will at least be at the level of the previous record of 1.7 billion euros attained in 2014.”
All business units have contributed towards the rise in overall current contracts. The main drivers of growth proved to be insurance and services such as maintenance and wear & tear or tyre services, which are of particular importance for the fleet business, among other segments. As at 31.12.2015, the insurance portfolio amounted to 5.1 million contracts, an increase of almost 19 percent. The level of current service contracts went up 12.5 percent to 2.7 million. The overall figure for new contracts acquired in the segments financing, leasing, insurance and services rose to 6.8 million during the last financial year, an increase of almost five percent. The customer deposits invested with Volkswagen Financial Services amounted to around 28.1 billion euros (2014: 26.2 billion euros) as at 31.12.2015, a plus of 7.2%. At the end of last year Volkswagen Financial Services had 15,182 employees, which is 4.6% more than the previous year’s figure. 6,513 of them were working in Germany.
The first nine months of outstanding business performance were followed by a fourth quarter that was significantly overshadowed by the diesel emissions issue. For Volkswagen Financial Services, four specific fields of action emerged as an immediate consequence:
Firstly, Volkswagen Financial Services developed a trust campaign to rebuild confidence together with the Volkswagen Group brands. In Germany and many other European countries, attractive new offers were made available to customers with components such as extended warranty, maintenance and inspection or special financing conditions.
Secondly, extensive reserves were set aside on the basis of the existing leasing portfolio so as to be prepared for a possible decline in the residual values. In the case of new contracts, the measures of the trust offensive have a stabilising effect on the residual value.
Thirdly, Volkswagen Financial Services have benefited in their refinancing activities from their successful diversification-based strategy.
Fourthly, the exceptional situation has been taken as an opportunity not only to exploit the potential for short-term cost reduction but also to effect sustainable improvements in efficiency.
The new strategy ROUTE2025 has also helped Volkswagen Financial Services cope with the diesel emissions issue. It describes the most important areas of activity and fields of growth for the future. When successfully implemented, it should make the company’s business mod-el even more independent of any fluctuations in individual segments. The topic of digitalisation is particularly important in ROUTE2025. “By 2020 we’ll be selling all our key products online as well,” said Santelmann. “With such a development, we are not only responding to changing customer needs, but we are also able to open up new customer and product segments. These include financing, insurance and services for used cars that are not sold through the dealerships,” Santelmann added.
Volkswagen Financial Services see a fourth growth dimension in this new sales and distribution channel. “In addition to what is already a broad-based position with the three growth drivers Products, Brands and Markets, we are now making our company additionally fit for the future,” Santelmann explained and declared the objective of expanding the portfolio to 30 million contracts by 2025. Santelmann looked optimistically to the future thanks to the company’s good strategic position: “We will courageously embrace the opportunities for growth available to us. I therefore see excellent prospects ahead for Volkswagen Financial Services.”
