Volvo Financial Services’ portfolio grows 4% in Q2

The financing arm of construction and commercial vehicle OEM Volvo Group saw its portfolio expand in the second quarter as equipment sales increased.

In Q2, Volvo Financial Services (VFS) announced plans to form a joint venture with Indian OEM Eicher Motors to expand financing and leasing offerings for both brands’ commercial vehicles, Volvo Group President Martin Lundstedt said during today’s earnings call.

The deal, which is expected to close in the first half of 2027, “is a very important next step in a market that is expanding rapidly and where we have a strong position,” he said.

Volvo Group benefited from growing demand for energy equipment driven by data center developments, Lundstedt said, with orders rising 13% YoY in its energy segment, Volvo Penta.

Truck orders also increased as freight activity improved, partially offset by decreased construction equipment sales, according to Volvo’s earnings materials.

BY THE NUMBERS: VFS reported in Q2:

New retail financing volume totaled 27.9 billion Swedish krona ($2.9 billion), up 0.4% year over year;
Total financed units on a 12-month rolling basis fell 2.8% YoY to 66,143;
Its credit portfolio grew 3.8% YoY to $28.4 billion;
Credit provision expenses increased 20.1% YoY to $40.3 million;
Operating income rose 8.4% YoY to $104.9 million; and
Total penetration rate on a 12-month rolling basis was 30%, down 1 percentage point YoY.

Meanwhile, Volvo Group reported:

Net sales rose 2.8% YoY to $13.1 billion;
Truck orders grew 32.8% YoY to 63,412 units;
Truck deliveries rose 5.5% YoY to 55,687;
Construction orders dropped 51.6% to 8,096; and
Construction deliveries decreased 48% to 8,834.

The steep decline in construction orders and deliveries reflect weaker demand in Asia and Africa, where orders were down 79% and 62% YoY, respectively, according to the earnings report.

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

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