Volvo Financial Services credit portfolio grows
Penetration rate up 1 percentage point as retail, dealer segments improve
Volvo Financial Services’ credit portfolio rose in the third quarter as the lender’s retail and dealer financing improved in the face of a market slowdown.
Parent company Volvo Group reported today the financial services’ credit portfolio increased 2.7% year over year to 262 billion Swedish Krona ($24.9 billion), compared with the first nine months of 2023.
Volvo Financial Services’ (VFS) penetration rate on a 12-month rolling basis stayed at 28% in Q3, up 1 percentage point YoY, according to the company’s earnings release. Penetration rate improved to 29% in the third quarter and hit a high of 31% in September, Volvo Group CEO Martin Lundstedt said during today’s earnings call.
The credit portfolio and the penetration remain “in a still very competitive landscape, so there is financing available,” he said. “The increase in the net credit portfolios relates to growth both in our retail and dealer or wholesale portfolio balances.”
BY THE NUMBERS
Meanwhile, the lender’s number of financed units, new retail financing and credit reserves as a percentage of a portfolio declined in Q3, as VFS reported:
- Total financed units on a 12-month rolling basis landed at 64,639 for the first nine months of 2024, down compared with 67,734 units in the first nine months of 2023;
- New retail financing totaled $2.6 billion, down 4.8% YoY as freight and construction demand slowed; and
- Credit reserve as a percentage of the credit portfolio was 1.33%, down from 1.42% in Q3 2023.
In addition, VFS’ credit provisions rose to $18.9 million in Q3, up 32.7% YoY, further limiting overall portfolio performance, Mats Backman, chief financial officer of Volvo Group, said during the earnings call.
“Portfolio performance continued to be good with customer delinquencies trending at average business cycle levels,” he said. “The solid portfolio performance was offset by higher credit provisions and unfavorable currency movements, which had a negative impact compared to Q3 2023.”
Volvo shares (OTC: VLVLY) were at $26.02 as of market close Friday, up 3.62% or 91 cents from market open. Volvo has a market capitalization of $51.23 billion.
Editor’s note: All figures have been converted to U.S. dollars.
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