30 June 1949: Germany was in the midst of reconstruction following the devastation of World War Two as "Volkswagen Finanzierungsgesellschaft mbH (VFG)" was founded in Wolfsburg upon the notarization of its memorandum of association. A few days after the West German Parliamentary Council had presented its new constitution, the Basic Law for the Federal Republic of Germany, a unique corporate history began to unfold in south-east Lower Saxony within the Volkswagen Group: namely the story of Volkswagen Bank.
With an initial equity of DM 20,000 and with a staff of six, the newly established financing company produced an overall result of just under DM 600,000 in 1949 through the financing of new and used cars. A short time later, it started dealer financing and then gradually extended its business operations and product portfolio even further over the following decades – from 1973 onwards furnished with a full banking license.
In 1982 the company moved its base from Wolfsburg to Braunschweig, and eight years later it entered the direct banking business. That was a spectacular and innovative step to take in 1990: after all, it thus became the first captive financial services provider to be able to provide its customers with checking accounts, savings products etc. The company had already been operating for some time under the new name V.A.G Bank GmbH.
In 1994 Volkswagen Financial Services were restructured and transformed into a stock corporation with the name Volkswagen Financial Services AG; Volkswagen Bank GmbH became one of its wholly-owned subsidiaries.
Today – in its anniversary year 2019 – Volkswagen Bank is a subsidiary of Volkswagen AG – and is doing splendidly as a leading mobility bank with around 2,200 employees and total assets of around EUR 73 billion (as at 30.06.2019).
No use looking back without looking forward
Taking pride in one's progress up to now is one side of the coin, but setting oneself up for an exciting and challenging future so as to continue operating successfully is the other.
"We want to sharpen our focus in future and grow further beyond our captive core business as a result. Departing from well-trodden paths is good for everyone now and again and serves to broaden one's perspective. We're satisfied with what we've achieved to date, but resting on our laurels is not an option for us," as Dr. Michael Reinhart, Chairman of the Management Board of Volkswagen Bank GmbH, outlines the current strategic thinking at the bank.
These deliberations take into account that the framework conditions for economically efficient action have changed massively – not just for Volkswagen Bank, but for an entire industry as well. For instance, the constant increase in regulatory requirements, alterations in customer behavior and, in particular, the increasingly competitive environment are creating new challenges that must now be faced.
The strategic approach necessary to do so is based on the economic strength of Volkswagen Bank, on its successful growth in the past and, above all, on bold business policy decisions.
These decisions also include shifting the branch focus away from the city center sites onto the VW plant locations or concentrating on high-margin products.
Promising growth areas are emerging, for example, in used car financing, in SME financing, in the traditional lending and deposit business or in the financing of e-mobility. The latter includes both the charging infrastructure and the financing of e-bikes. This field – which is also a dominant priority within the Volkswagen Group – represents a highly interesting market for Volkswagen Bank: still focused on automobility but with an enormous potential.
Dr. Michael Reinhart is looking to the future and intends to 'attack': "Our strategy is the bedrock of our continued success. I'm therefore certain that we will all play our part in making sure Volkswagen Bank has a strong focus on the lending and deposit business and is effective and competitive across the mobility spectrum."
As already pointed out: 70 years on, Volkswagen Bank still has big plans...