Press Release

December 14, 2020

Volkswagen Financial Services are weathering the crisis well

Contract portfolio expected to exceed previous year's figure

Operating result down on previous year – at 2018 level

Focus on digitalization and used car business in 2021

Braunschweig, 14 December 2020. Volkswagen Financial Services are weathering the crisis well. The total number of current contracts at the end of the year is expected to be slightly above the previous year's figure of 21.5 million units. "After the slump in the spring, we reacted quickly and appropriately and therefore made the most of this financial year. We were able to partially offset the sharp decline in vehicle deliveries through a substantial increase in penetration. For the first half of the year, however, we had to reckon with earnings well below the previous year," said Lars Henner Santelmann, Chairman of the Management Board of Management of Volkswagen Financial Services AG. At the end of the third quarter, the operating result was still around 20 percent below the previous year's level. "It is already foreseeable today that the operating result achieved by the Volkswagen Financial Services 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," says Frank Fiedler, CFO of Volkswagen Financial Services AG. He continues: "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."

After a successful start to the current financial year, the ambitions of Volkswagen Financial Services were thwarted throughout the world by the Covid-19 pandemic. "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," says Fiedler. He goes on to explain: "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."

Volkswagen Financial Services have initiated numerous stabilization measures to safeguard their business. "This year, we have again demonstrated how dynamically and quickly we can act. For example, our joint sales promotion program with the Volkswagen Group brands has had a successful impact on vehicle sales and on the number of new contracts," says Santelmann. He is already looking ahead: "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."

Information for editors:

Volkswagen Financial Services are a business division of the Volkswagen AG group of companies and comprise Volkswagen Financial Services AG along with its associated companies, Volkswagen Bank GmbH, Porsche Financial Services, and the financial services companies in the USA and Canada that belong directly or indirectly to Volkswagen AG – with the exception of the financial services of the Scania brand and Porsche Holding Salzburg. The key business fields embrace dealer and customer financing, leasing, the bank and insurance business, fleet management and mobility offers. Volkswagen Financial Services have a total of 16,571 employees worldwide – including 7,414 alone in Germany. Volkswagen Financial Services report total assets of around EUR 223.5 billion, an operating result of EUR 2.96 billion and a portfolio of around 21.5 million current contracts (as at: 31.12.2019).

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