Volvo Financial Services sees 4.6% increase in financed units

Volvo Financial Services reported mixed results in the second quarter as retail financing rose while its credit portfolio shrank. 

However, parent company Volvo Group was pleased with the captive’s overall portfolio performance, with “delinquencies and write-offs under control,” Chief Financial Officer Mats Backman said during the company’s July 17 earnings call. 

The uptick in originations came despite Volvo Group’s net sales dropping 12.4% year over year. 

BY THE NUMBERS: Volvo Financial Services (VFS) reported in Q2: 

• New retail financing volume totaled 27.8 billion Swedish krona ($2.9B), up 0.4% YoY; 
• Operating income fell 9.3% YoY to $96.5 million. 
• Total financed units on a 12-month rolling basis increased 4.6% YoY to 68,066; 
• Its credit portfolio declined 2.6% YoY to $27.3 billion; 
• Penetration rate on a 12-month rolling basis was 31%, up 3 percentage points YoY; and 
• Credit reserves as a percentage of the credit portfolio for the first six months of the year was 1.3%, unchanged from a year prior. 

The company attributed decreased operating income to a weaker krona and increased credit provisions, which jumped 12.9% YoY to $33.5 million, Backman said during the call. 

NOTEWORTHY: In Q2, Volvo Group and Daimler Truck launched Coretura, a joint venture aimed at developing software and other digital applications for commercial vehicles. The venture will offer application-agnostic products to other commercial vehicle OEMs, with a goal of standardizing vehicle software across the industry. 

Volvo Autonomous Solutions also achieved “a major milestone in mining efficiency” in Q2, hauling over 1 million tonnes of limestone for one of its customers. 

“This achievement underscores the transformative impact of autonomous technology also in the mining and quarry segments alongside the hub-to-hub segments,” Volvo Group President and Chief Executive Martin Lundstedt said during the call. 

FLASHBACK: Volvo Construction Equipment last month acquired Swedish dealer group Swecon for $735 million. With construction equipment orders rising 23.7% YoY in Q2, VFS is poised for increased construction financing opportunities as Volvo Group continues to invest in this segment.  

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