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ReprintsVolvo plans captive finance arm
LAS VEGAS -- Volvo Cars of North America will launch a captive finance arm this year to increase sales, boost leasing rates and improve customer retention.
"To both our core company and our dealer body, it's a critical foundational issue — for competitiveness, for controlling your customer data," Volvo Cars CEO John Maloney told Automotive News.
Bank of America will provide funding for Volvo Car Financial Services' financing products. Volvo expects commercial loan products for dealers to be available by midyear. Consumer loan and lease products will start Dec. 1.
Until then, Volvo will continue to work with U.S. Bank, which has been Volvo's preferred financing provider since December 2009.
The move, announced at the National Automobile Dealers Convention here this week, fulfills a promise Volvo made to its U.S. dealers, who have clamored for a captive that can offer more advantageous leases and loans than an outside lender.
"Customers like to have confidence in the company they're working with, and they want to know that you're full service and you can do everything for them," said Chip Ott, a Pennsylvania dealer and chairman of the Volvo Retail Advisory Board.
Volvo's current lease rate is about 25 percent, the company said. It's lower than other luxury brands' and had dipped to near single-digits in 2010.
With the new captive, Volvo is targeting a lease rate of 35 percent by 2015, said Tony Nicolosi, Volvo vice president of financial services.
He will become president of Volvo Car Financial Services, which will be a wholly owned subsidiary of Volvo Car Corp.
It will be based in Rockleigh, N.J., with its own staff, including sales representatives to support dealers.
You can reach Amy Wilson at awilson@crain.com.
