Volvo Financial Services new business volume drops 5% in Q2

Volvo Financial Services’ new business volume dropped 5% in the second quarter, mirroring Q1 declines.

Parent company Volvo Group reported today 27.7 billion Swedish krona ($2.6 billion) in new retail financing volume for the subsidiary in Q2.

Volvo Financial Services’ (VFS) penetration rate on a 12-month rolling basis stayed at 28%, a slight increase from 2023. The credit portfolio increased 13% year over year to $25.6 million compared with the first half of 2023.

“The penetration level increased somewhat in a competitive environment,” VFS wrote in its Q2 report. The report also noted that “a return to more average business cycles is visible.”

BY THE NUMBERS:

Also in Q2, VFS reported:

• The number of financed units on a 12-month rolling basis was 65,044 in the first half, down from 66,867 in 2023.
• Credit reserve as a percentage of the credit portfolio — excluding Russian and Belarus operations — was 1.33%, down from 2.69% in 2023.

VFS’ operating income rose 10.9% YoY to $97.2 million in Q2, from “continued profitable portfolio growth, which was partly offset by higher credit provisions,” according to the report.

“The increase in the overall portfolio is related both to growth in the retail as well as in the dealer portfolios,” Martin Lundstedt, chief executive of Volvo Group, said in today’s earnings call.

Volvo shares (OTC:VLVLY) were at $27 as of market close Thursday, up 5.5% or $1.40 from market open. Volvo has a market capitalization of $54.99 billion.

Editor’s note: All figures have been converted to U.S. dollars.

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