Volvo Financial Services new business volume down 5% in quarter
Delinquencies improved slightly but remained at ‘reasonable levels’
Volvo Financial Services’ new business volume dropped 5% in the first quarter of 2024 as the number of units it financed declined slightly.
The Volvo Group subsidiary reported new retail financing volume of 24 billion Swedish krona ($2.2 billion) in Q1.
Volvo Financial Services’ (VFS) penetration rate remained consistent year over year, at 27%. The company’s new retail financing and penetration rate was elevated compared with Q1 2022 by roughly three points.
“Overall portfolio performance continues to be good, with customer overdues and defaults at relatively low levels historically,” Volvo Financial Services stated in its earnings supplement published today. The company did note that “a return to average business cycle conditions in some markets is visible.”
BY THE NUMBERS:
For Q1, VFS also reported:
- Number of financed units on a 12-month rolling basis was 66,258, compared with 67,727 in Q1 2023;
- Net credit portfolio was $24.7 billion, up from $20.7 billion in 2023.
- Credit reserves as a percentage of the portfolio, excluding operations in Russia and Belarus, decreased to 1.35% from 2.88% in Q1 2023.
Selling expenses offset portfolio growth
VFS’ earnings report noted that its overall operating income increased to $92 million in Q1, driven by “continued profitable portfolio growth.” But higher expenses associated with sales as well as increased credit provisions offset the increase.
“The financing of new products slowed down, reflecting the normalization of demand for group products,” VFS noted in its earnings statement.
“During Q1 2024, demand continued to normalize at good levels across many of the Volvo Group’s markets,” Martin Lundstedt, chief executive of Volvo Group, stated in a release today.
On today’s earnings call, Lundstedt noted VFS’ “strong … growth, thanks to a growing business portfolio. He added that “delinquencies are somewhat up from last year, but still on reasonable levels.”
Shares of Volvo (OTC: VLVLY) were trading at $26.18 as of market close Wednesday, up 1.39% or 36 cents from market open. Volvo has a market capitalization of $53.9 billion.
Editor’s note: All figures have been converted to U.S. dollars.
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