Volkswagen Financial Services

Volkswagen Financial Services continued its robust business performance in a difficult 2021. It expanded its attractive range of services and mobility services.

STRUCTURE OF VOLKSWAGEN FINANCIAL SERVICES

Volkswagen Financial Services comprises dealer and customer financing, leasing, direct banking and insurance activities, fleet management and mobility services in 47 countries. The key companies are Volkswagen Financial Services AG and its affiliated companies such as Volkswagen Leasing GmbH, as well as Volkswagen Bank GmbH, Porsche Financial Services and the financial services companies in the United States and Canada, the only exceptions being the financial services business of the Scania and Navistar brand and of Porsche Holding Salzburg.

BUSINESS DEVELOPMENT

Volkswagen Financial Services has offered its customers a car subscription (AutoAbo) since 2020 and further expanded this mobility service in the reporting year. Customers can book various classes of vehicles and conclude a contract for a minimum of three months. Thereafter, this contract can be terminated on a monthly basis. Subscribers pay only for the use of the vehicle and for fuel. All other relevant costs such as registration, servicing, insurance and taxes are covered by the monthly mobility rate. In the dynamic market for mobility products, the financial service provider is responding to the private customer’s desire for a high degree of flexibility and comprehensive cost control with its AutoAbo car subscription service. The subscription service was expanded in the reporting year to include the ID.3. Volkswagen Financial Services is thus helping the Group to systematically implement its e-mobility strategy.

In 2021, Volkswagen Financial Services entered into the leasing and financing of bicycles. Volkswagen Financial Services has gained important partners through various equity investments and a sales cooperation with Bike Mobility Services GmbH. This enables customers throughout Germany to select the bicycle of their choice at a bike shop, sign the contract there and take the cycle with them. As well as leasing, customers can also obtain a financing solution through the FINANCE A BIKE brand.

Already established in Germany, the United Kingdom and Spain, the online used vehicle platform heycar was rolled out in France during fiscal year 2021. With the Renault Group and RCI Bank and Services, the Berlin-based heycar Group has another strategic partner and a strong investor at its side along with Volkswagen Financial Services, Volkswagen AG, Daimler Mobility AG and Allianz SE. This will allow heycar to gather further momentum in terms of expanding across Europe and growing its existing offering.

In 2021, Volkswagen Financial Services joined the Development and Climate Alliance Foundation, which was initiated in 2018 by the German Federal Ministry for Economic Cooperation and Development. Aimed primarily at the private sector, the foundation’s objective is to create a non-governmental platform for climate protection efforts. Its supporters avoid and reduce greenhouse gas emissions or offset them through high-quality projects. Contributions are voluntary and go beyond existing legal obligations for reducing CO₂.

The main refinancing sources for Volkswagen Financial Services are money market and capital market instruments, asset-backed securities (ABS) transactions, customer deposits from the direct banking business and bank credit lines.

In 2021, Volkswagen Financial Services AG issued three bonds with different terms and a total volume of €2.5 billion. Volkswagen Leasing GmbH placed a total of six bonds with a total volume of €5.5 billion. Risk premiums in fiscal year 2021 were back at, or in some cases even below, pre-crisis levels.

Other bond transactions were conducted in currencies such as pounds sterling, Swedish kronor and Norwegian kroner. In addition to this, private placements were issued in various currencies.

Volkswagen Bank did not enter into any transactions with secured or unsecured bonds in the reporting period.

In fiscal year 2021, Volkswagen Leasing GmbH placed three ABS transactions secured by lease receivables with a volume of €2.75 billion. The issuances met the quality criteria of the STS Securitization Regulation for particularly high-value securitizations and were oversubscribed several times.

Outside Germany, Volkswagen Financial Services issued a total of six ABS transactions in the United States, China, Japan, Australia and Brazil.

ID.3 in AutoAbo

The number of new financing, leasing, service and insurance contracts from Volkswagen Financial Services signed in fiscal year 2021 fell by 1.1% year-on-year to 7.8 million. With 22.0 (21.9) million contracts being closed as of December 31, 2021, the total number of contracts was higher than in the prior year. The number of contracts in the Customer Financing/Leasing area fell by 3.6% to 10.9 million. The Service/Insurance area accounted for 11.1 million contracts, 5.0% more than in the previous year. With credit eligibility criteria remaining unchanged, the penetration rate, expressed as the ratio of financed or leased vehicles to relevant Group delivery volumes – including the Chinese joint ventures – was at 35.8 (35.2)%.

As of the end of the reporting period, Volkswagen Bank GmbH managed 1.4 (1.4) million deposit accounts. Volkswagen Financial Services employed 14,681 people worldwide, including 7,385 in Germany, as of year-end 2021.

SALES REVENUE AND EARNINGS

Sales revenue at Volkswagen Financial Services amounted to €41.7 billion in the reporting year. This was 7.8% more than in the previous year. The operating result more than doubled to €5.7 (2.8) billion. The increase was due primarily to the high demand for used vehicles and considerably lower risk costs for credit risks and residual value risks compared with the previous year. The cost-cutting programs also paid off.