Financial Services
Sales strategy successfully backed by innovative solution packages
Mobility packages offering leasing or financing plus insurance and vehicle servicing are very popular with customers.
STRUCTURE OF THE FINANCIAL SERVICES DIVISION
Following the sale of Europcar in March 2006, the Financial Services Division now consists only of the Financial Services business line. The division was reorganized at the beginning of 2006. Volkswagen Financial Services AG, which was previously responsible for the Europe and Asia-Pacific regions, now coordinates the Group’s global financial services activities. Accordingly, Volkswagen AG’s Latin American financial services companies are now the responsibility of Volkswagen Financial Services AG. This does not affect the legal independence of the North American subsidiaries. The aim of the reorganization is to apply globally standardized management principles, to foster knowledge transfer and to leverage further growth potential.
BUSINESS DEVELOPMENT
In fiscal year 2006, Volkswagen Bank GmbH, a subsidiary of Volkswagen Financial Services AG, launched a product campaign with mobility packages combining product offerings with leasing or financing together with insurance and vehicle servicing. This innovative offering was further developed into numerous packages to meet the individual demands of customers. It is now available not only for Volkswagen Passenger Cars brand models, but also for all SEAT models in the form of the “emoción package”.
In the past fiscal year, Volkswagen Financial Services AG completed the formation of a reinsurance company by entering it in the commercial register. The new Volkswagen Reinsurance AG is a wholly-owned subsidiary of Volkswagen Financial Services AG. In cooperation with longstanding partner Allianz Versicherungs-AG, Volkswagen Reinsurance AG now offers Group brand customers intelligent insurance rates and automotive insurance products through Volkswagen Versicherungsdienst GmbH.
In 2006, rating agencies Moody’s Investors Service and Standard & Poor’s carried out their regular update of credit ratings. Standard & Poor’s raised both the short- and long-term ratings of Volkswagen Bank GmbH by one rating class, thereby acknowledging the company’s sustained positive development. Standard & Poor’s also followed Moody’s in raising its credit rating of Volkswagen Bank GmbH one class higher than that of Volkswagen AG and Volkswagen Financial Services AG. This means that Volkswagen Bank GmbH now has a separate rating from that of the Volkswagen Group.
The number of new contracts in the financing, leasing and insurance businesses in 2006 was some 2.5 million, an increase on the previous year. The number of contracts was 6.3 million at December 31, 2006. The Customer Financing/Leasing and Service/Insurance areas recorded year-on-year increases of 3.7% and 14.3% respectively. The proportion of the total vehicles delivered by the Volkswagen Group accounted for by financed or leased vehicles was 32.0% (30.3%) with unchanged credit eligibility criteria. The direct banking business at Volkswagen Bank also continued to develop positively. Deposits increased to €8.8 billion (+ 1.0%) at December 31, 2006. Volkswagen Bank direct managed some 883,287 accounts – a year-on-year increase of 4.0%.
The total number of contracts recorded by the fleet management business on December 31, 2006 was slightly above that of the previous year. At the end of 2006, our LeasePlan joint venture managed some 1.3 million vehicles (+ 3.3%).
SALES REVENUE AND EARNINGS
In fiscal year 2006, the Financial Services business line generated sales revenue of €8.9 billion. This corresponds to a year-on-year increase of 6.7%. Operating profit was €843 million, meaning that the Financial Services Division again made a major contribution to the Volkswagen Group’s result.
FINANCIAL SERVICES DIVISIONS
