VLG enjoyed a competitive edge in these services in the form of some 4,000 Volkswagen, Audi and NSU dealers throughout Germany. Demand was also boosted by rising costs in Germany and the associated liquidity squeeze being felt by companies. The number of leased vehicles rose from 4,151 in 1969 to just under 29,000 in 1975, with profit rising from around DM 500,000 to over DM 20 million during the same period. Only 327 of the approximately 10,000 lessees were bulk customers with fleets of more than 10 vehicles, while the share of small businesses in the number of vehicles delivered had grown to roughly 65 percent. The associated rise in administrative costs was offset by organisational rationalisation, particularly the switch to a computer-based stock control and invoicing system in 1973.
The swift and efficient administration paid off when VLG opened the leasing business to private customers in May 1977. After an intensive advertising campaign, this customer grouping represented roughly 13 percent of all clients by 1980. From 1975, the extended range of products and services included motor vehicle tax and car insurance, advance financing of accident costs and claims handling. The ‘Europa-Service’ set up in 1978 guaranteed all customers a standardised and cashless service in 15 European countries.
With its product offerings specially tailored to the needs of specific customer groups and with variable terms for bulk customers, V.A.G Leasing GmbH, which relocated to Braunschweig in 1982, continued on its successful course. Although competitive pressure increased enormously in the 1980s, the company maintained its leading position on the car leasing market first won in 1968. At the turn of 1992, the company with its workforce of 432 and an inventory of 349,000 vehicles was integrated into the finance holding company. The merger with the bank opened up the prospect of favourable refinancing opportunities.
VWFS became an international company with an extensive range of banking, leasing and insurance services. The economic upswing that followed the 1993 global economic crisis created favourable conditions for the envisaged worldwide growth of VWFS, which in 1996 assumed responsibility for the Group’s financial services in the Asia-Pacific region. By 2003, subsidiaries had been established in China, Japan, Thailand, Australia, Taiwan and Singapore, with the Singapore base responsible for managing regional operations. The representative office in Beijing, which was opened as early as 1996, acquired its licence in 2004 and was the first European financial services provider to begin operating in China. The second path to internationalisation took VWFS into as yet uncharted European growth markets, and was based on the principle that “financial services follow automotive”. VWFS set up a leasing company and a bank in Poland in 1996/97, a financing company in co-operation with the importer in Turkey in 1999, and the Volkswagen Group Finance OOO company in Moscow in 2003. Co-operation agreements linked VWFS to the Volkswagen Group’s financial services providers in North and South America, with VWFS providing strategic consulting.
The Volkswagen Bank also went international, and had become a European bank by 2001, opening branches in Belgium, Ireland, Spain and Italy. With deposits totalling DM 4.5 billion, the bank now held the position of Germany’s second largest direct bank. The introduction of the online current account marked the final step in becoming a general bank offering a comprehensive product portfolio. “AutoCredit” established itself as an attractive alternative to “ClassicCredit” for private clients. This innovative form of car financing, which combined low instalments with the option to purchase, arrange follow-on financing or return the vehicle at a guaranteed price at the end of the contract, became a bestseller. By the end of 2001, the number of contracts under this innovative product had risen to 351,000, or approximately one third of all customer financing.
In the dealer finance sector, V WFS prepared its response to the anticipated abolition of block exemption and made the necessary arrangements to develop new customer potential outside the Volkswagen Group. Established as a branch ofVolkswagen Bank, Europcar Bank began in 2003 by offering financial services for mobile home dealers, subsequently expanding its services to cover multi-brand and independent used car dealers. Entry into the independent business – a step also followed by some international subsidiaries – boosted the number of customer financing contracts to 1.312 million by 2003. This meant that contracts had more than trebled in number since 1991.
