Volvo establishes captive finance arm
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LAS VEGAS -- Volvo Cars of North America is launching a captive finance arm, and services will begin this year.
Bank of America will provide funding for Volvo Car Financial Services' financing products. The move fulfills a promise Volvo made to its U.S. retailers, who have clamoring for a captive that can offer leases and loans.
Volvo expects commercial loan products to be available within six months. Consumer loan and lease products will be available by the end of the year.
"Launching a true captive finance arm is the most important step we will make this year to support our dealer network and customers," Volvo Cars CEO John Maloney said in a statement. "This is a key initiative in our long-term growth plan."
Volvo Car Financial Services will be a wholly owned subsidiary of Volvo Car Corp. and will be based in Rockleigh, N.J. A team of sales representatives will directly support retailers. Retail financing and leasing will be offered for new and used Volvos at both standard market rates and at promotional rates supported by Volvo Cars of North America.
The captive also will provide Volvo retailers with co-branded commercial financing products such as inventory floor plan, working capital loans and real estate loans.
Volvo and Bank of America have a framework agreement and will execute contracts in the coming weeks. Volvo Car Financial Services will license Bank of America's proprietary underwriting and risk-based pricing technology to support the credit process. But the Volvo captive will have its own separate credit policy and staff.
In addition, Bank of America Merrill Lynch will become the exclusive provider for certain Volvo Car Financial Services automotive loan and lease securitizations.
CenterOne Financial Services, a division of World Omni Financial Corp., will manage the servicing of contracts.
You can reach Amy Wilson at awilson@crain.com.
