Volkswagen Financial Services (VWFS) is set to launch an electric vehicle (EV) finance package designed to keep car retailers as an integral part of the retail auto market.
According to the captive, the new approach will protect the car by offering customers a minimum of a 2-year lease from new, and then reselling as an approved vehicle, all while being maintained and serviced by the retailer’s aftersales team.
By doing this, car retailers will be able to keep in touch with customers when they come in for servicing, which is hoped to establish lasting relationships and inspire brand loyalty.
The new service – named Lease&Care – will offer all electric models currently available from VW though finance agreements, which now make up some 80% of the manufacturer’s new car sales.
Dan James (pictured above), marketing director at VWFS, said: “The creation of the Lease&Care package looks to encourage motorists to make the switch to EVs without worrying about costs. We understand there may be a worry around converting to EVs due to the mystic around depreciation and running costs, but our new package allows customers to try an EV such as the Volkswagen ID.3 at a more affordable price, for a length of time that suits them. We’re hoping to make medium to high-end priced EVs available to the masses.”
The package offers three different levels, basic servicing (small), all routine maintenance (medium), and fully comprehensive maintenance replacements including tyres (large).
James continued: “The beauty of the Lease&Care package adds an additional layer of flexibility by allowing customers to extend the length of their lease for a little while longer if they are looking to hold off until a newer model is released. This new way of attaining an EV allows motorists to swap between models to suit the customer’s lifestyle. At the end of the lease, it should just be a case of handing back the vehicle and getting the latest model in return while keeping their carbon footprint lower. We have to make this process easier and simpler, we should not be seen as a hurdle. With this package, we are confident that we are helping more people to join the EV revolution.”
Weathering the crisis well
Alongside the development of the new Lease&Care solution, VWFS has announced it is “weathering the crisis well.”
According to the company, it was able to partially offset the sharp decline in vehicle deliveries through a substantial increase in penetration. Now, the total number of contracts at the end of 2020 is forecast to be slightly above the previous year’s figure of 21.5 million units.
Lars Henner Santelmann, chairman of the board of management at VWFS, said: “After the slump in the spring, we reacted quickly and appropriately and therefore made the most of this financial year. For the first half of 2020, however, we had to reckon with earnings well below the previous year. At the end of the third quarter in 2020, our operating result was around 20% below the previous year’s level.”
Frank Fiedler (pictured below), chief financial officer of VWFS, added: "It is already foreseeable today that the operating result achieved by the VWFS division in 2020 will remain below the previous year's figure, but not as significantly as was assumed a few months ago. We are within the range of the 2018 result. It looks as if we will get through the crisis relatively well. The result will be adversely impacted by higher risk costs for credit and residual value risks as a consequence of the pandemic, but not as strongly as previously assumed.
"As a result of the pandemic we have of course stepped firmly on the cost brakes once again and we have benefited from our high number of contracts. Nevertheless, we had to record higher credit risk costs. The extent to which credit defaults will actually occur will only become clear in the coming year when the worldwide deferral programs expire and the suspension of the obligation to file for insolvency is discontinued."
Santelmann concluded: "In the coming financial year, we want to overcome the consequences of the crisis and work further on developing our digital business model so that we can interact directly with our customers online even more frequently. At the same time, we will continue to drive our used car business forward worldwide with financial services. In doing so, we will also be casting our focus on the relatively new used car business in China."