Volvo Financial Services’ credit portfolio swells in 2024
Originations rose 5% YoY to record $3.2B in Q4
Volvo Financial Services beefed up its credit portfolio in 2024 despite seeing a drop in total financed units.
The financing arm of commercial vehicle and construction equipment manufacturer Volvo Group reported a record 35.6 billion Swedish Krona ($3.2 billion) in new business volume in the fourth quarter, up 5% year over year, Volvo Group Chief Executive Martin Lundstedt said during today’s earnings call.
Volvo Financial Services’ (VFS) credit portfolio reached $25.5 billion at yearend, a 10.2% increase from 2023. Its penetration rate was 29% in 2024, up two percentage points YoY.
The company attributed its portfolio performance to “customer delinquencies stabilizing at an average business cycle level,” Chief Financial Officer Mats Backman said during the call.
However, “the solid portfolio performance was partly offset by higher operating expenses, increased credit provisions and unfavorable currency movements,” he said.
BY THE NUMBERS: VFS reported the following yearend results in today’s earnings statement:
- Total financed units fell 4.1% YoY to 65,250 in 2024;
- New retail financing totaled $10.5 billion, down 2.5% YoY;
- Credit reserves as a percentage of the credit portfolio was 1.29%, down from 1.37% in 2023;
- Credit provisions rose 70.8% YoY to $95 million; and
- Operating income increased 8.7% YoY to $367.4 million.
FUTURE LOOK: Volvo Group announced several partnerships in Q4 that signal increased research and development investments in 2025.
Volvo and Daimler Truck will form a joint venture to develop software for heavy-duty trucks. The venture, called Cortura, will offer application-agnostic products to other commercial vehicle OEMs.
“And that is important because, in order to really get enough volumes for hardware and software development and to make that cutting-edge innovation, and also to innovate on the edge there, it is important to join forces,” Lundstedt said during the earnings call.
Volvo also partnered with logistics company DHL to launch an autonomous trucking fleet in Texas. Volvo Autonomous Solutions and DHL will test autonomous vehicles on public roads from Dallas to Houston and from Fort Worth to El Paso.
MARKET REACTION: Shares of Volvo (OTC: VLVLY) were up 7.5% from market open to $28.06 as of market close today. It has a market capitalization of $57.3 billion.
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