Quarterly financial results
released by Europe’s car manufacturers last month saw broadly
improved sales revenues and profit figures from their finance arms
compared to the same period last year.
Go deeper with GlobalData
Last month’s
encouraging quarterly financial results released by Europe’s car
manufacturers are positive despite the continuing uncertain
economic climate in Europe and further afield.
Though each captive has its own
story to tell, it appears that revenue-boosting offers to customers
lie at the heart of the stronger performers.
There has also been feedback
pointing to the increased popularity of leasing and personal
contract purchase in the UK market.
Out of the captives prepared to
disclose their results, the largest percentage increase in profit
on the corresponding period in 2010 was announced by Daimler
Financial Services.
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By GlobalDataIt reported a 169.7% increase in
pre-tax profit to €321m (£279m), up from €119m in the first quarter
of 2010.
Its worldwide loan book value fell
3% to €61.7bn compared with the final quarter of 2010, though
adjusted for exchange-rate effects was almost unchanged.
New business grew compared to the
first quarter of 2010 by 11% to €6.9bn, or by 8% after adjusting
for currency effects.
The improvement in earnings was
mainly caused by lower risk provisions and higher interest
margins.
Due to the natural disaster in
Japan, write-down charges of €29m were recognised for anticipated
losses of receivables.
The next highest pre-tax profit
growth figure was provided by BMW Group’s captive, BMW Financial
Services (BMWFS), which saw first quarter revenues rise 4.5%
year-on-year to reach €4.2bn.
Profit before tax was up to €429m
from €222m in 2010, a 93.2% increase.
Some 276,856 finance and leasing
contracts were written by BMWFS over the quarter, a 13.8% increase
year-on-year.
However, just over 40% of new cars
sold by the group during the quarter were leased or financed by
BMWFS, 6.8 percentage points lower than in the corresponding period
of 2010.
According to the group’s first
quarter results, lease business grew by 19.3% year-on-year, while
credit financing grew by 11.5%.
Lease deals now make up 30.3% of
new business for the group.
Volkswagen Financial Services also
had a healthy quarter, reporting a first quarter pre-tax profit of
€333m, up 56.3% on last year’s result of €213m.
New business for the VW Group
captive was up 19.5%, with 700,000 contracts signed during the
quarter. Out of this total, 500,000 were written in the group’s
European markets.
In contrast, Ford Credit Europe (FCE) reported a sharp fall in
first-quarter profit, attributed to a weak pound and a smaller
fleet of vehicles following disposals by its parent company, Ford
Motor Company.
First quarter pre-tax profit was £68m, down 22.7% from £88m in
the same quarter a year earlier.
An FCE spokesman said that Ford’s
sale of car brands Jaguar and Land Rover in 2008, and Volvo last
year, had shrunk the size of FCE’s car fleet.
This caused a fall in revenues from
old and new car-finance contracts.
In the US, General Motor’s former
captive Ally Financial’s Global Automotive Services division also
fared less well in the first quarter of the corresponding period
last year, reporting pre-tax profit down to $692m, from $842m in
the first quarter of 2010, a 17.8% reduction in profit.
Finally at Renaults’ captive, RCI
Banque, while a profit figure was not available, sales financing
revenues rose 8.4% in the first quarter of 2011.
At 253,109, the number of new contracts rose 11.3% compared with
the first quarter of 2010, and the volume of loans outstanding
amounted to €22bn, up 7.3% on the first quarter last year.
See
also:
View from the UK – captive finance
leaders comment on the British market
