Volkswagen Financial Services has continued to lend significant sums to small and medium-sized fleets for the purchase of new vehicles despite the credit crisis.
The company recently announced that it had already lent £1 billion so far this year to finance the purchase of vehicles from the Volkswagen group.
While the majority of this £1bn was to retail customers through franchise dealers, at least £10m was to small and medium businesses running fleets of between five and 350 vehicles through contract hire deals.
The £1 billion in lending represents finance for almost 73,000 cars and vans sold in the UK since the start of the year across the range of Audi, Volkswagen, Volkswagen Commercial, Skoda, SEAT and Bentley models.
Finance for LCV sales accounted for 2,800 units.
This target was reached five months ahead of predictions and flies in the face of the general trend away from lending.
“We put our success down to the fact that we have more available funds and can move faster than other financial organisations.
"Long-term strategic planning means that the credit crunch is not affecting our lending abilities,” managing director Graham Wheeler told Fleet News.
“We borrow money specifically to get people into our cars…we may be paying a higher fee along with everyone else, but we have no limitations on the amount we can borrow.”
Since 2007, fleet operators as well as private motorists have been finding it increasingly difficult to obtain finance for new vehicle acquisitions.
The problem stems from the fact that banks and financial institutions have tightened their lending criteria and, where they are lending, are charging higher interest rates.
However, Volkswagen Financial Services has been growing its business year on year.
It hit the £1bn target in December 2006, then it reached it in October 2007 and this year it reached it July.
The company says it will hit that target a month earlier next year, despite the difficulties in the market, which includes many financial institutions reportedly refusing to write perceived risky business.
“Our job is to manage and understand risk,” said Mr Wheeler. “We have a fantastic book already and we have very low levels of default.”
Some of Volkswagen Financial Services' success is down to the fact that dealer finance deals have become more attractive to small fleets unable to source finance elsewhere.
This is confirmed by data released today by the Finance and Leasing Association, which showed that the popularity of both leasing and personal contract purchase has increased over the past 12 months.
Leasing deals agreed within dealerships have grown by 27% while PCPs are up 18%.