VW, Wells Fargo tie-up an advantage for dealers

TO THE EDITOR:

On Sept. 16, Volkswagen Financial Services U.S. and Wells Fargo unveiled a strategic partnership that will see Wells Fargo become the preferred retail financing provider for Volkswagen, Audi and Ducati brands in the U.S., beginning in April. This shift marks a key evolution in how these brands handle vehicle purchase financing, with Volkswagen Financial Services maintaining its focus on leasing, mobility solutions and dealer support.

At Haig Partners, we monitor trends that affect dealership valuations closely, and this partnership promises several advantages for dealers. 

Lower cost of funds: A major upside is the potential for reduced financing costs. Wells Fargo’s significant scale and expertise in auto finance could lead to more competitive rates, which would benefit customers and, in turn, drive higher sales volumes at dealerships.

Enhanced subvention programs: The ability to offer lower financing rates can also expand incentive programs. This would allow for deeper buydown opportunities, making vehicles more affordable.

Leasing continuity: Leasing remains a crucial aspect of the business for both Volkswagen and Audi. I estimate that leasing accounts for 80 percent or more of Audi’s U.S. sales and 30 percent of Volkswagen’s. 

Volkswagen Financial Services will continue to handle leasing and customer service, ensuring minimal disruption for dealers, while Wells Fargo steps in to manage retail financing.

While Wells Fargo taking on this role may seem bold, it’s not without precedent. J.P. Morgan has successfully operated as the private label finance partner for several brands. Recent J.D. Power surveys ranked Jaguar Land Rover Financial and Maserati Capital No. 1 and No. 2 in the luxury segment, with Subaru Motors Finance ranking No. 2 in the mass-market segment. 

Wells Fargo’s automotive experience: The bank’s long-standing presence in automotive retail financing, dating to the days of WFS Financial Inc., means they bring deep expertise to this partnership. 

Understandably, some logistical concerns have surfaced. It’s expected that Volkswagen will soon address many of these questions, offering clarity to its dealer network.

I align with Charlie Hall, chairman of the Volkswagen Dealer Advisory Council, in believing that this partnership will enhance dealership profitability. 

JAYSON CROUCH, Managing director, Haig Partners
Los Angeles