26 mar 21

Building on 2020 success, VWFS targets €4bn profit in 2025

In 2020, Volkswagen Financial Services (VWFS) achieved an operating result of €2.8 billion. That may have been down 5.3% over the previous year, but it’s still the company’s second-highest result ever. And VWFS is setting its sights even higher: €4 billion profit by 2025.

Some key figures from the annual report:

  • The number of new contracts acquired worldwide was 7.9 million in 2020 (-6.9% vs. 2019).
  • However, the number of current contracts rose slightly to 21.9 million units (+1.9%).
  • The total volume of assets amounted to €225.6 billion (+1%).

Well above expectations
Frank Fiedler, the company’s CFO, pointed in particular to “the global increase in our market penetration and a significantly better Q4 performance” as the reasons for an operating result well above original expectations. “In addition, lower risk costs than were assumed after the first six months of last year have also had a positive effect on the result.”

Next year, VWFS expects its results to be back in line with 2019. Looking further into the future, VWFS is confident it will hit its target of 30 million contracts globally by 2025. The main growth drivers are, and will remain:

  • digitalisation of the VWFS business model, 
  • global expansion of the used-car business, and 
  • greater focus on the European fleet sector. 

As such, by 2025, VWFS expects an operating result of around €4 billion, with total assets amounting to €300 billion, approximately. “Thanks to our organisational realignment in 2017, we can achieve this without additional equity capital,” says Mr Fiedler. 

600 million touchpoints
Presenting the financial results for 2020 in Braunschweig, Lars Henner Santelmann (pictured), Chairman of the VWFS Management Board was pleased to show “such a good result, given the extremely challenging conditions.” He lauded the robustness of the company’s business model, underpinned by both its consistent cost reduction programme and its early-stage investments in digitalisation. 

Having already invested €500 million in digitalisation before Covid-19, VWFS is currently undergoing a complete transformation, leading to a ‘data-driven direct sales approach’. Further mobility services (including vehicle subscriptions and services for parking, fuelling and charging cars) will increase the number of customer touchpoints from around 210 million per year now to 400-600 million per year soon.  

"In the future, we want to remain involved with the vehicle and the customer for much longer and thus participate along the automotive value chain better than we do today," Mr Santelmann concluded.

Image: VWFS

Authored by: Frank Jacobs