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ReprintsVW Credit dumps used-car leases, 84-month loans
Donna Harris
Automotive News
December 23, 2008 - 1:05 pm ET
Volkswagen Credit will stop offering leases and balloon loans on certified used VW vehicles next month. The new restrictions are designed to reduce VW Credit's losses in the volatile credit market. Volkswagen's captive finance company also will stop offering 84-month loans on new vehicles. The policy changes, introduced in letters to dealers Friday and Monday, take effect Jan. 6. Kevin Kelly, president of VW Credit, and Horst Meima, vice president of sales and marketing, said in the letters that the changes "will minimize severity of future losses." VW Credit also will: n Require larger down payments from customers with less-than-perfect credit. The company is reducing the amount of money it is willing to advance for vehicle loans, except to buyers in the top credit tier. n Stop financing loans and leases for brands other than Volkswagen. n Charge dealers $150 to finance independent vehicle service contracts on loans of more than 60 months. VW Credit says it will deduct the nonrefundable fee from lease, retail or balloon loan proceeds. The fee is not to be passed to retail customers. Kelly and Meima say VW Credit discussed the policy changes this month with the Volkswagen National Dealer Advisory Council. "We are doing everything possible to sustain a competitive position," the executives wrote. "These changes will allow us to increase our focus on the contracts which represent the majority of our mutual business." |
You can reach Donna Harris at dharris@crain.com.
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