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    VOW3   DE0007664039

VOLKSWAGEN AG

(VOW3)
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Real-time Estimate Quote. Real-time Estimate Tradegate - 06/23 03:59:42 pm
219.175 EUR   -1.89%
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Volkswagen, Ford to exit auto finance business in India - sources

06/11/2021 | 08:14am EDT
FILE PHOTO: The Ford logo is pictured at the Ford Motor Co plant in Genk

NEW DELHI, June 11 (Reuters) - The auto financing arms of Volkswagen AG and Ford Motor Co plan to stop giving new credit to car buyers and dealers in India and will exit from the country, sources aware of the development told Reuters.

Volkswagen Finance Private Ltd, the German carmaker's finance arm, stopped giving loans to car buyers in India last year and in May told dealers of all VW brands, which includes Volkswagen, Skoda and Audi, to find other financing, two sources with direct knowledge of the talks said.

As some customers failed to make repayments, the finance unit has suffered losses, and will close for business by Dec. 31, the sources said.

More than 50% of Volkswagen group dealers use credit from the finance arm, they said.

Volkswagen Finance Private Ltd said in a statement that it had acquired a major stake in Indian loan brokerage portal KUWY Technologies to service its retail customers.

It is in talks with dealers and will review its business strategy by the end of the year, the company said.

The auto finance arms are classified as non-banking financial companies (NBFCs) and they compete with banks for providing credit. But banks have access to cheaper funding so can offer loans at lower rates than those offered by NBFCs or shadow lenders.

To offset the disadvantage, Volkswagen and Ford would offer incentives to those dealers who have used their credit finance, the sources said.

Dealers typically need credit to buy cars from automakers which they then sell on to customers.

Volkswagen's plan to exit the financing business has surprised dealers, coming weeks ahead of the launch of Skoda's new sport-utility vehicle (SUV) to boost sales in India, the two sources said.

Skoda dealers have been asked to find new financing by the end of the month - a tight deadline ahead of a new model launch, one source said.

Ford Credit, the automaker's financing arm, stopped lending to car buyers at the end of last year and will cease credit to dealers by June 30, two separate sources said.

The decision to exit the financing business comes at a time when Ford is finalising a new strategy for India after ending ties with Mahindra & Mahindra on Dec. 31.

A Ford Motor India spokesperson said the company regularly assesses market conditions for its credit business and the decision to discontinue was conveyed to dealers in October - before it made any announcement on the Mahindra partnership.

"We are confident the auto financing sector in India can support Ford customer and dealer new financing needs. Our team continues to service our existing book of business," the spokesperson said, adding that 25%-30% of its dealers do business with Ford Credit. (Reporting by Aditi Shah; Editing by Sanjeev Miglani and Louise Heavens)


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
FORD MOTOR COMPANY 3.42% 15.42 Delayed Quote.68.15%
INDIAN BANK -1.16% 149.3 End-of-day quote.74.52%
MAHINDRA AND MAHINDRA LTD 0.87% 781.95 Delayed Quote.7.58%
VOLKSWAGEN AG -2.44% 217.95 Delayed Quote.46.57%
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Financials
Sales 2021 250 B 298 B 298 B
Net income 2021 13 784 M 16 450 M 16 450 M
Net cash 2021 31 342 M 37 403 M 37 403 M
P/E ratio 2021 8,07x
Yield 2021 3,15%
Capitalization 131 B 156 B 156 B
EV / Sales 2021 0,40x
EV / Sales 2022 0,35x
Nbr of Employees 662 653
Free-Float 56,8%
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Mean consensus BUY
Number of Analysts 25
Last Close Price 223,40 €
Average target price 277,19 €
Spread / Average Target 24,1%
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Managers and Directors
NameTitle
Herbert Diess Chairman-Management Board
Arno Antlitz Chief Financial Officer
Hans Dieter Pötsch Chairman-Supervisory Board
Frank Witter Head-Finance & Information Technology
Kurt Michels Chief Compliance Officer
Sector and Competitors
1st jan.Capitalization (M$)
VOLKSWAGEN AG46.57%155 893
TOYOTA MOTOR CORPORATION22.94%251 360
DAIMLER AG37.27%101 048
GENERAL MOTORS COMPANY42.27%85 938
BMW AG28.71%71 956
FORD MOTOR COMPANY68.15%59 515