Volvo forms finance arm; dealers cheer
LAS VEGAS -- Volvo Cars of North America delighted dealers by announcing at the make meeting the launch of a captive finance arm with services beginning this year.
A captive will increase sales, boost leasing rates and improve customer retention, Volvo executives say.
"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 will be available by midyear. Consumer loan and lease products will start Dec. 1. Until then, Volvo will continue to work with US Bank.
The move fulfills a promise Volvo made to dealers, who had been clamoring for a captive that can offer more advantageous leases and loans.
"Customers like to have confidence in the company they're working with, and they want to know that you're full-service," said Chip Ott, a Pennsylvania dealer and chairman of the Volvo Retail Advisory Board.
Knowing a captive was coming was an incentive for the owners of Bayway Volvo, which opened in Houston last fall, Bayway COO Lance Willis said.
"We're very excited," Willis said. "It's going to put more cars on the street and therefore improve dealers' profitability and stability."
Volvo executives also told dealers:
-- Vehicle shipments to dealers will increase 20 percent this year, with the main gains coming in the XC60, XC90 and XC70.
The increase started in January and will be front-loaded in the first quarter, Maloney said.
-- After U.S. sales of 67,240 last year, Volvo expects to exceed 71,000 sales this year, Maloney said.
But dealers are looking for more. Said Ott: "We want 100,000."
• Bigger 1st-quarter inventories
• Sales goal: More than 71,000
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