Volvo Financial Services originations set record

Commercial financier Volvo Financial Services’ commercial book grew in the second quarter alongside strong deliveries and industry demand.  

Volvo Financial Services’ new retail financing volume reached a record $2.9 billion in Q2, up 12.3% year over year, according to the earnings report.  

“For Volvo Financial Services, it was a good growth in absolute new business volumes with record business volumes for the second quarter,” Volvo Chief Executive Martin Lundstedt said during Volvo Group’s earnings call today. 

The company’s credit portfolio, which includes truck, construction equipment, bus and marine segments, totaled $24.5 billion, up 27.4% YoY, according to the earnings report.  

Volvo Financial Services’ 12-month rolling number of financed units declined 4.7% YoY to 66,867 units in Q2, according to the earnings report. The company’s 12-month total financing penetration rate was 27%, down compared with 30% a year ago.

“The high deliveries of the group, the favorable mix and the improved prices on the group’s products are also affecting the portfolio growth of VFS positively,” Jan Ytterberg, Volvo’s acting chief financial officer, said during the earnings call. “Fierce competition from banks and leasing companies is putting pressure on earnings, but also making our penetration decline.”

 Volvo Financial Services’ performance was propped up by consumer demand, Lundstedt said. 

“Penetration was stable in a continuous competitive market,” he said. “We continue to see a stable portfolio performance on the back of high customer activity levels and demand for transportation and construction services in most parts of the world.” 

Shares of Volvo [OTC: VLVLY] were trading at $21.71 as of market close today, down 0.73% or $0.16 from market open. Volvo has a market capitalization of $44.8 billion.