Q: Volkswagen decided to introduce leasing more than 40 years ago. What were the reasons behind this decision?
A: Forty two years ago, leasing was our first financial service in the Mexican market. We consider it to be the best mobility scheme due to its many advantages, including a freer liquidity for the user. Nowadays, 68% of our clients are companies and roughly one fourth of our portfolio is based on leasing services. This figure changes depending on the brand, with Audi’s 37% leasing portfolio being a prime example. Our leasing services have grown significantly over the past two years, and considering the loyalty implications of this product, we want to continue promoting it with our Mexican clients. Private leasing remains a challenge in Mexico. Ownership is still considered one of the top priorities for customers, and although we have seen some evolution, currently there are more opportunities in the fleet and corporate segment.
Q: Considering that Volkswagen Bank was created to boost the company’s leasing and financing services, what led you, in Mexico, to enter the personal banking arena?
A: Volkswagen had already created direct banking activity in Germany in the early 90s, sustained by the reputation of the Volkswagen Group. By offering personal banking services, the direct banking unit was able to establish a more comprehensive relationship with clients, which translated to an increased loyalty. This is our main aim at Volkswagen Financial Services worldwide. In Germany, the direct bank of Volkswagen Financial Services is one of the largest of its type in terms of deposits. It was also a fundamental part of the recovery process after the crisis of 2008, as the deposits business allowed the company to continue with its financing and leasing business, while other competitors had to temporarily leave the field.
In 2008, after we detected that this might also be an opportunity for our Mexican customers, we created the direct bank in Mexico. It is an entity under the brand umbrella of Volkswagen Financial Services in Mexico that is open to the general public, offering deposits and investment products with the highest quality and security standards. At the end of 2014, our savings product was recognized as the best of its type in the country. We also offer automotive financing, fleet mobility services, insurance products, and leasing for all the brands within the Volkswagen Group in Mexico.
Q: How much have financing services grown in Mexico over the last few years, and what factors have made this development possible?
A: In Mexico, cash remains an important channel for the acquisition of vehicles. However, over the last few years, its market share has been decreasing while captives have been comparatively expanding. As the automotive market is the basis for the related financing services growth, the development of the Volkswagen Group’s brands is especially important for us. Last year, the group grew by around 7% in the market, and our captive, Volkswagen Financial Services, significantly faster. Volkswagen Financial Services had a productive year in 2014, with a 20% upsurge in contracts and a penetration that rose from 37% to 44% in 2013. If we consider our insurance products, we can say that more than half of the Volkswagen Group’s cars that are acquired in Mexico carry a product by Volkswagen Financial Services. Last year we also created Think Blue. Finance., a program that was considered a benchmark initiative, with the main objective of promoting low emission cars through attractive financing opportunities.
Q: Does Volkswagen Bank manage your insurance products directly or do you collaborate with insurance companies?
A: We are currently working with five insurance companies and a broker that is constantly looking for the best offers in the market. That way, our salespeople can offer the best solution to the client according to their region, the brand of the car or the model. In case of an accident, we have worked extensively to make sure that cars go to shops within our network, managing to return almost 100% to our dealers. We always strive for customer satisfaction, not only when the clients get the car, but throughout their entire experience with us.
Q: What future do you see for your automotive financial services in Mexico?
A: This year we launched Ducati Financial Services to start to offer our financing services to those clients, considering their very particular needs. In this case we can offer credit for the motorcycle as well as for the accessories related to the Ducati experience.
Compared to other markets in the world, Mexico is still really focused on pure leasing. However, over the last couple of years we have seen an increasing demand for additional services from fleet customers, such as road assistance, substitute cars, maintenance, repairs, and other related services. Therefore, we are developing a program that can offer customized solutions, which we expect to launch by the end of 2016. We want to keep growing and we expect to reach 50% of our market with 100,000 financing and leasing contracts by the end of 2015.