The used car strategy of Volkswagen Financial Services is a key driver of the goal of 30 million contracts by 2025. In particular, digitization is driving the wide range of sales opportunities.
The global used car market is gigantic: more than one hundred million Volkswagen Group vehicles and even more cars of other brands are on the roads of the world, which will all change hands at some point. This is why Volkswagen Financial Services has a strong focus on the used car business – with success. In Germany, more than half of all financing contracts in the portfolio are already on used vehicles. Worldwide this figure is still around 30 percent.
"If we take the German used car market as a model, we have enormous growth potential for used car financing worldwide. This is what drives us forward," says Frank Fiedler, CFO of Volkswagen Financial Services AG, and continues: "Our strategic approach is to ensure that these cars continue to be used and kept in good condition. The vehicles are of high quality, have a durable lifespan and the resources for them to be manufactured have already been used. This is why we actively offer our entire financial services product range for used cars as well as new".
In order to create a new distribution channel that is also attractive to car buyers and dealers, Volkswagen Financial Services launched the heycar used car platform in Germany in 2017 (www.heycar.de). This platform offers used cars, regardless of brand, with a maximum age of eight years, a maximum mileage of 150,000 kilometers and a warranty from a quality dealer. According to a survey by the market research institute YouGov, the warranty is particularly important for German used car buyers. For 81 percent of those surveyed, it plays a key role in the purchase decision.
With heycar, we have created a key instrument for tapping the used car potential of the respective markets.
Under the holding company, Mobility Trader Holding GmbH, heycar has also been operating in the United Kingdom since summer 2019 (www.heycar.co.uk). CFO Frank Fiedler, who represents Volkswagen Financial Services at the shareholders' meeting of Mobility Trader Holding GmbH, explains: "With our ROUTE2025 strategy, we want to have around 30 million contracts in place by 2025. With heycar, we have created a key instrument for tapping the used car potential of the respective markets. Here we want to grow particularly in Europe. After Germany and the United Kingdom, we are looking to Spain as our next market.”
Even a corona-related economic downturn in Europe should not stop heycar's ambitious goals in the used car business. "Should there be a strong economic downturn, we are prepared with heycar and our used car strategy accordingly. This is because customers tend to prefer used cars to new cars in weak economic times," explains Fiedler.
In Germany, after three years, there are now around 420,000 vehicles of various brands and dealers on the website. In the United Kingdom, after less than a year since the start of business, the number has already risen to more than 210,000. So heycar represents a considerable part of the market and offers vehicles from all manufacturer brands.
The brand independence of heycar is also underlined by the fact that Daimler Mobility Services is another shareholder in addition to Volkswagen Financial Services AG and Volkswagen AG. Combined with the collaboration with approved quality dealers and the transparency of the heycar platform, the used car buying process will be easier and clearer for customers and dealers. Mat Moakes, CEO of heycar UK, explained how heycar stands out from the competition at its launch last year: “We’ll offer a simpler, more effective solution for both used car buyers and dealers. Our site will be ad-free, improving transparency and consumer trust. heycar won’t charge dealers a listing fee, encouraging them to display all their best quality stock. After the launch phase we will charge on a lead-generation basis, guaranteeing a win-win for our dealer partners.”
Especially in the used car business, digitalization plays a major role. Not only in that almost all vehicles are first researched and selected online by the customers, but finding the right financing from home is also becoming increasingly important. While the calculation of various options is already possible online today, the goal is to offer the option to transact solely online in the future. According to a study from May 2020 on the UK market, conducted by YouGov, 29 percent of customers are already comfortable buying with finance online, and this is only set to grow over time – guaranteed.