Volvo 2015 Annual Report Download - page 101

VFS financial solutions are offered with the sales
of Volvo Group vehicles and equipment, and are
available with other service and aftermarket
products such as service contracts, repair and
maintenance contracts, and insurance, etc.
through seamless integration at the point-of-
sale with Volvo Group dealers. This approach delivers a conven-
ient one stop-shopping experience for the customer.
To ensure successful business execution, VFS continued its
focus on 1) Strengthening customer and dealer partnerships
throughout the product lifecycle, 2) Capturing profitable growth
opportunities, 3) Driving operational excellence in support of inte-
grated point-of-sale customer offerings, 4) Attracting, developing
and retaining high-performing employees, and 5) Optimizing
shareholder return on equity.
VFS’ mission is to be the best captive in industry. To achieve
this mission, VFS aims to be the provider of choice, the employer
of choice, and to deliver strong shareholder value. In 2016, a con-
tinued focus will be on delivering dealer and customer value by
working with our product companies to deliver superior products.
Ease of doing business, outstanding service levels, building rela-
tionships, and unsurpassed expertise in our industries are at the
forefront of achieving this value.
Strong profitability
Despite growing competition and liquidity in our markets, execu-
tion of our commercial strategy resulted in record new business
volume levels and strong portfolio growth. This growth, along with
pricing controls, cost controls and risk management contributed
to record profitability levels for customer finance. During 2015,
STRONG GROWTH, PROFITABILITY
AND PORTFOLIO PERFORMANCE
Volvo Financial Services (VFS) offers competitive financial solutions which strengthen
long-term relationships with Volvo Group customers and dealers. As the number one
provider of financial solutions for Volvo Group product sales, VFS consistently delivers
value to customers and builds loyalty to the Volvo Group brands through our ease of
doing business and our knowledge and expertise of the industry.
VFS achieved its best operational efficiency in its history. Scala-
ble business platforms and higher service levels delivered signifi-
cant operating leverage for VFS by enabling growth without com-
mensurate cost increases.
Strong portfolio performance
During 2015, managed assets in VFS grew to record levels. Over-
all, customer overdues, repossessions, inventories, and write off
levels remained low and supported strong profitability.
North America continued to perform extremely well while the
majority of our European markets also returned to good levels
during 2015. Downturns in Brazil, China and Russia negatively
impacted portfolio performance during the year, but activities to
drive sales and deliver profitability were executed very well.
Customer finance operations
The Customer Finance operations recorded strong levels of new
business volume during the year despite weak demand in Brazil
and the other BRIC markets. Total new financing volume in 2015
amounted to SEK 54.8 billion (54.7). Excluding the BRIC markets,
the new business volume increased by 3.9% compared to 2014,
adjusted for changes in exchange rates, driven primarily by strong
performance in North America.
Financing penetration was stable in served markets, but overall
penetration was lower than the prior year mainly due to changes
in market delivery mix. In total, 49,038 new Volvo Group vehicles
and machines (54,819) were financed during the year. In the mar-
kets where financing is offered, the average penetration rate was
25% (28).
The net credit portfolio of SEK 122,606 M (117,101) increased
by 6.5% on a currency adjusted basis when compared to 2014
and reached a new year-end high. The funding of the credit port-
folio is matched in terms of maturity, interest rates and currencies
in accordance with Volvo Group policy. For further information,
see note 4 to the Consolidated financial statements.
PENETRATION RATE*, %
Volvo
Trucks
Renault
Trucks
Mack
Trucks
Buses Volvo
CE
UD
Trucks
14 15
2830 1923 2023 2227 4139 1011
* Share of unit sales financed by Volvo Financial Services in relation to total number
of units sold by the Volvo Group in markets where financial services are offered.
GROUP PERFORMANCE BOARD OF DIRECTORS’ REPORT 2015
VOLVO FINANCIAL SERVICES
VFS conducts customer financing in 44 countries in the world.
Position on world market Volvo Financial Services operates
exclusively to support the sales of vehicles and equipment which
are produced by the Volvo Group. In doing so, VFS enhances the
competitiveness of Volvo Group products and helps secure loyalty
to the Volvo Group brands.
Number of regular employees 1,340 (1,339)
Share of Group net sales,
3% (3)
99