Volvo Financial Services’ retail loan volume rises
Penetration rate up 2 percentage points as retail, dealer segments improve
Volvo Financial Services’ financing volume rose in the first quarter as the lender achieved stability in the face of a slowdown in construction and transportation.
Parent company Volvo Group reported today that the company’s new retail financing totaled 24.9 billion kronor ($2.6 billion), up 3.8% year over year as construction and truck demand slowed, according to the earnings release.
Volvo Financial Services’ (VFS) penetration rate on a 12-month rolling basis increased to 29% in Q1, up 2 percentage points YoY, according to the company’s earnings release. The VFS portfolio reflects a more stabilized financing environment, Volvo Group Chief Executive Martin Lundstedt said during today’s earnings call.
“Volvo Financial Services’ portfolio performance continued to be good, with customer delinquencies stabilizing at average business cycle levels,” he said. “VFS continued to deliver good and stable earnings.”
BY THE NUMBERS
Meanwhile, the lender’s number of financed units, new retail financing and credit reserves as a percentage of its portfolio declined in Q1, as VFS reported:
- Total financed units on a 12-month rolling basis landed at 66,326, up compared with 66,258 units in the first quarter of 2024;
- VFS’ credit portfolio decreased 2.2% YoY to $27.2 billion; and
- The credit reserve as a percentage of the credit portfolio was 1.29%, down from 1.35% in Q1 2024.
Meanwhile, VFS’ credit provisions rose to $31.9 million in Q1, up 24.6% YoY, as part of a tight yet stable portfolio performance, Mats Backman, chief financial officer of Volvo Group, said during the earnings call.
“The currency effect on the credit portfolio was minus [$2.3 billion] compared to first quarter 2024,” he said.
Volvo shares (OTC: VLVLY) were at $25.85 as of market close Wednesday, down 1.52% or 40 cents from market open. Volvo has a market capitalization of $53.3 billion.
Editor’s note: All figures have been converted to U.S. dollars.
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