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Lending Exposure Doubles for Major European Carmakers
BMW, Daimler, Renault and Volkswagen have more than doubled their exposure to vehicle loans and leases to more than €400 billion over the past eight years, the Financial Times estimates.
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BMW, Daimler, Renault and Volkswagen have more than doubled their exposure to vehicle loans and leases to more than €400 billion over the past eight years, the Financial Times estimates.
The record high exposure compares with the total assets of such large independent banks as Germany’s Commerzbank, FT says. The newspaper says VW’s financial arm alone has more than €100 billion in loans and leases on its balance sheet.
Credit losses on such loans made by the four European carmakers is well under 1%. Analysts note that the captive finance units help generate sales volume and build customer loyalty.
But experts also fret that the funding requirements that result from increased retail financing are burdening balance sheets with more bond obligations and securitization risks.
The past four years of surging new-car sales in Europe will eventually result in a glut of used vehicles, analysts warns. They say the oversupply will drive down resale prices and put pressure on lenders that had calculated loan rates on assumed higher residual values.
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