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ReprintsVW Group, amid European finance push, plans slower approach with Audi in U.S.
Volkswagen AG plans to increase financial backing for its vehicles in Europe by one-third to strengthen customers' loyalty while taking a slower approach with the Audi brand in the United States.
The automaker will finance or lease 40 percent of new VW, Seat, Skoda and Audi models delivered in Europe within four years compared with 30 percent in 2011, Frank Witter, the head of the manufacturer's financial unit, said in an interview.
Volkswagen posted a 14 percent increase in companywide global sales last year to 8.16 million cars, SUVs and commercial vans.
"Financial-services customers are more loyal," Witter said in a presentation on Jan. 13. "There is a date that the customer has to make a decision, when the finance contract ends, and we know about that date. This is an opportunity or us to talk to the customer and offer what's new out there."
But the VW Group has no plans to expand customers' financial offerings in the United States for the Audi luxury division, Witter said.
Roughly 65 percent of Audi's U.S. sales are financed or leased, with a 50-50 split between each option.
"We will grow the business very slowly," said Witter. "We are not going to risk something that is very important: residual value and quality. If you put a lot of incentives behind your car, you have way more off-lease value cars, and that puts pressure on your residual values."
Audi historically hasn't been as aggressive in its U.S. leasing model as BMW or Daimler, according to Jesse Toprak, an analyst at Truecar Inc. in Santa Monica, California.
"In a lot of U.S. markets, the leasing percentage for German luxury brands exceeds 70 percent," Toprak said on Dec. 30. "So if your lease model is not that attractive, you're not going to sell that many."
Audi ranks second worldwide in luxury-vehicle sales, after BMW, while in the U.S. its sales lag behind such brands as Mercedes-Benz, BMW and Lexus.
Audi posted its best U.S. sales year ever in 2011 with sales climbing 16 percent to 117,561 units. U.S. light-vehicle sales at the VW division grew 26 percent in 2011 to 324,402 units, while Bentley had a 31 percent sales gain over 2010.
Globally, the VW Group wants to hit 10 million vehicle sales by 2018. It is rapidly expanding in two of the world's largest auto markets -- China and the United States -- in a bid to surpass General Motors and Toyota Motor Corp. as the world's largest carmaker.
The volume targets for the VG Group include sales of 1 million units in the United States by 2018, with the VW brand accounting for 800,000 units and the Audi brand tallying 200,000 light vehicle sales.
Bloomberg and David Phillips contributed to this report
