Volkswagen Financial Services AG

Transcription

1 Volkswagen Financial Services AG 2 nd Asia-Pacific Fixed Income Investor Conference Hongkong January, 2005

2 Representatives 2 Volkswagen Financial Services AG Helge Knut Hiller, Head of Corporate Communications and Investor Relations Volkswagen Financial Services Asia-Pacific Pte Ltd. Oliver Schmitt, Managing Director Stefan Rolf, General Manager Treasury

3 3 Volkswagen Financial Services AG Introduction Volkswagen Group Automotive Division Financial Services Division Volkswagen Audi Commercial Remaining Financial Europcar Brand group Brand group Vehicles companies Services* Rental Business *Financial Services consists of VWFS AG plus the financial services activities in North America (NAR) and South America (SAR)

4 4 Volkswagen Financial Services worldwide Canada USA Mexico Brazil NAR Subsidiaries Argentina SAR Subsidiaries Netherlands Belgium Great Britain Ireland France Switzerland Portugal Spain Italy VW FS AG Subsidiaries and Branches Sweden Germany Poland Russia Czech Republic Slovakia Austria Turkey Greece China Japan Taiwan Singapore New Zealand Australia Affiliates of Volkswagen Financial Services AG (Austria and Switzerland only insurance agency services) Companies with which service agreements exist

5 Volkswagen Financial Services AG inter-company relationship 5 VW AG Control and Profit / Loss-Agreement 100% Gives VW AG the right to issue and enforce instructions e.g. with regard to overall business strategy and management board participation VW FS retains executive responsibility Volkswagen Financial Services AG Profits can only be transferred from VW FS to VW AG when ample reserves; VW AG shall compensate any annual net loss at VW FS that cannot be covered by existing reserves 100% Volkswagen Financial Services Asia-Pacific Pte Ltd. Letter of comfort VW FS declares that it will exert its influence to ensure that affiliated companies meet their liabilities to financial institutions over which it has managerial control and/or in which it holds a majority share of the capital stock

6 6 Dr. Bernd Pischetsrieder, Chairman of Managing Board Volkswagen AG Volkswagen will accelerate Financial Services activities to increase the profitability of the total Group

7 7 Importance of Services along the Automotive Profit Chain Distribution + Financial Services Business Manufacturer Systems and modules suppliers 7% 16% 62% 5% 9% 15% 12% New car retailing Leasing/Financing business Insurance business Used car retailing 8% Component specialists 8% 2% 2% Standard parts suppliers 5% 5% Raw material providers 4% 17% Car rental business Service and parts business Source: Company data, CSFB estimates, Automotive News Almost 2/3 of profits on cars is realised post-purchase mainly in financing, insurance and services/parts

8 8 Volkswagen Financial Services AG enables stronger Participation in Automotive Value Chain Participation across the automotive value chain Enhancing customer relationships through CRM R&D Procurement Manufacturing Sale of new cars Financing / Leasing of new cars Insurances and Warranties After-sales services Value Creation VW Automotive Value Creation Volkswagen Financial Services AG Sale of used cars Financing/ Leasing of used cars Insurances and Warranties Support of Volkswagen AG in fortifying role as Mobility Provider Sales support of brands of the Volkswagen Group Strengthening of customer retention via highly focused financial services Tapping the full potential of customer relationships via systematic Data Mining / CRM Supplementing classical fields with high-margin financial services Take further advantage of high turnover rate of auto loans and leases Management of customer cash flow Disposal Customer contact Solutions/ Creation of customer value Data Mining Identify customer needs Generate customer data Analyse customer data

9 9 Financial services support VW Group strategy Maximising customer cash flow Financing/insurance products consistently support VW Group sales Across all brands of the VW Group, profit earned through automotive financing (where used) significantly exceeds the subsidies Customers replace cars more frequently Financing incentivises new car purchase over second-hand purchase Customers buy more options Brand loyalty FS captive customers Non-FS captive customers Brand loyalty is key The average customer buys up to 10 automobiles over a lifetime 75% 60% 60% 25% Germany USA Source: VW FS AG

10 10 Volkswagen Financial Services worldwide steady balance sheet growth Balance sheet FS worldwide (IAS) (Euro billions) VWFS AG NAR SAR Europcar Balance sheet VW FS worldwide has experienced steady balance sheet growth (45% of VW Group)

11 11 Volkswagen Financial Services AG - Key Operating Data Portfolio ( 000) New Contracts 3,210 1,153 3,690 1,289 3,813 1,374 4,006 1,432 Growing customer base Penetration 25% 26% 31% 32% Retail + Leasing receivables ( mn) Wholesale Receivables ( mn) 17,986 4,046 19,700 4,492 21,544 4,862 23,778 4,893 Increasing asset pool Direct-bank deposits ( mn) 3,411 4,546 5,613 6,744 Successful business model Employees 3,616 4,119 4,426 5,055 IAS Profit before tax ( mn) Strong consistent growth Cost-income ratio 53% 55% 55% 57% High efficiency

12 12 VW FS AG s consistent profitability is reflected by increasing RoE 600 Profit before tax ( million) RoE 2003: 21% 2002: 18% 2001: 15% 2000: 14% RoE ranks among top third of captive Financial Services players

13 13 VW FS AG Loss Ratios 0.8 0,8% % 0.6 0,6% % 0.4 0,4% % 0.2 0,2% % 0.0 0,0% % Retail Wholesale Loss Ratio: (Drawings on provisions + direct write-offs) / Avg. total receivables of the preceding 4 quarters

14 14 Overview LeasePlan Corporation Acquisition closed in November 2004 Cutting edge worldwide provider of Fleet Management Services. No. 1 in Europe, No. 4 worldwide. Around 1.2 million vehicles under management in 26 countries (about 50% leasing contracts). Market leader in 11 countries, among the TOP 5 in all others. 2003: > 7,000 employees. Total Assets 2003: 10.8 billion, of which 9.7 billion are leasing assets. Equity 2003: 1,026 million. Net profit 2003: 193 million. Own banking and insurance license.

15 15 VW FS AG has established a diverse funding base and decreased reliance on inter-company loans VW FS AG VW AG Funding rationale: Asset-based funding requirements Risk Basis: Customers ability to pay vs Funding requirements covered by cash flow Risk Basis: Automotive Industry Funding of VW FS AG assets: 31 Dec Dec Dec Nov 04 Inter-company loans 22% 10% 11% 7% Liabilities from Direct Banking 17% 19% 21% 20% Drawn bank lines 21% 12% 9% 8% Capital markets 21% 38% 45% 50%

16 16 Diversified Access to the Capital Markets 10bn Multi-Currency CP Programme 18bn Debt Issuance Programme PLN2bn Debt Instrument Issuance Programme Issuers: Volkswagen AG Volkswagen Financial Services AG Volkswagen Leasing GmbH* Coordination Centre Volkswagen SCS Volkswagen Financial Services N.V.* Svenska Finans AB (publ)* 2,5bn Multi-Currency CP Programme Issuers: Volkswagen Financial Services AG Volkswagen Leasing GmbH* Volkswagen Financial Services N.V.* Volkswagen Finance Japan KK* 10bn Debt Issuance Programme Issuers: Volkswagen Bank Polska S.A.* Volkswagen Poznan Sp. z o.o.** Volkswagen Motor Polska Sp. z o.o.** Volkswagen Leasing Polska Sp. z o.o.* Coordination Center Volkswagen SCS Sitech Sp. z o.o. Issuer: Volkswagen Bank GmbH Issuer: Volkswagen Bank GmbH JPY60bn Electronic Commercial Paper Programme AUD1bn Debt Issuance Programme SGD500m Debt Issuance Programme Issuer: Volkswagen Finance Japan K.K.* Issuer: Volkswagen Financial Services Australia Limited* Issuer: Volkswagen Financial Services Singapore Ltd* * CP and MTNs / Debt Instruments are guaranteed by Volkswagen Financial Services AG ** Debt Instruments are guaranteed by Volkswagen AG

17 Overview of VW FS Group in Asia-Pacific 17 Expansion in Asia-Pacific 2004 VW FS China 2003 VW FS Taiwan 2002 VW FS Australia 2001 VW FS Singapore 1998 VW FS Beijing Office (converted to an operating company in 2004) 1997 Volkswagen Finance Japan 2004 VW FS New Zealand 2004 VW FS Asia-Pacific (Headquarter Singapore)

18 Volkswagen Financial Services Operations in Asia-Pacific 18 Volkswagen Financial Services AG 100 % Volkswagen Financial Services Asia-Pacific Pte Ltd Establishment: May 2004 After the completion of the current projects: We will conduct market surveys in e.g. India, Malaysia, Indonesia Started as Rep. Office in Jul 2001 Volkswagen Finance Japan KK since Jan % subsidiary of of VW FS AG Volkswagen FS Taiwan March % subsidary of of VW FS AG Volkswagen FS Singapore Ltd since Feb > JV: 51% VW FS AG 49 % Group Exklusiv Volkswagen FS Australia Ltd since Jan % subsidiary of of VW FS AG Volkswagen FS China Operative start: Sep % VW FS AG Volkswagen FS New Zealand Ltd Operative start: Sept > JV: 51 % VW FS AG 49 % European Motor Distributors South Korea = operative company or in implementation = consolidation = current project

19 Opportunities in China 19 China is the fastest growing region for automotive sales. In million vehicles were sold. It is believed that the market has the potential to develop into the world s second largest market after the US by However, the development of the vehicle financing industry has lagged automotive sales in much of Asia. In the case of China (the 2 nd largest auto market after Japan within the region), automotive captive finance companies have only recently been allowed to commence operations. With current vehicle financing penetration of < 20% compared to 60-80% for the developed markets (e.g. 70% in Germany and 80% in the US), China offers great potential for auto financing business.

20 Challenges in China 20 Besides the general economic environment, credit quality and vehicle residual values are fundamental risk factors for vehicle financing business. In the absence of a reliable credit bureau (particularly for individual borrowers) and as a result of insufficient depth in the used car market, inadequate credit information and lack of predictable residual values are common problems that plague much of Asia. A well developed used car market and stable vehicle prices would allow for better estimates of vehicle residual value. Furthermore, an underdeveloped settlement / collection infrastructure and unclear and complex rules and regulations have to be overcome.

21 21 Strategic Outlook Strong focus on safeguarding as well as further developing the core business. Development towards a data-mining company. Extension of direct banking business in Europe taking advantage of VW Bank s European Passport. Extension and further development of insurance business. Multi-brand fleet management business. Geographic expansion. Funding : Targeting increased independence from Volkswagen Group Rating.