Johannesburg - Volkswagen Financial Services of Germany and FirstRand vehicle and asset finance business WesBank have established a joint venture to provide financial services to support the Volkswagen (VW) car and light commercial vehicle brand and the Audi car brand in South Africa.
Volkswagen Financial Services owns 51 percent of the new finance provider and FirstRand the remainder of the joint venture, which commenced operations at the beginning of this month.
Called Volkswagen Financial Services South Africa, it will provide a range of products and services, including traditional instalment sale finance, leasing, dealer funding, automotive insurance and, in the future, fleet management.
Frank Witter, the chief executive of Volkswagen Financial Services, said yesterday that South Africa was a strategically important market and entering this market was consistent with Volkswagen Financial Services’ pursuit of international growth.
Witter said the VW group had been in South Africa for more than 60 years, had co-operated closely with WesBank since 1999 through the joint venture between WesBank and VW South Africa but it was now time to take this relationship to the next level.
He said it had taken Volkswagen Financial Services longer than some other original equipment manufacturers, such as BMW and Mercedes-Benz, to establish its operations in South Africa because its former relationship with WesBank was doing well and due to the management capacity and priorities of Volkswagen Financial Services.
Chris de Kock, WesBank’s chief executive, said the joint venture was forecasting its loan book would grow to R22 billion over the next three years. De Kock said this would make Volkswagen Financial Services SA the largest single captive vehicle finance company in South Africa “by some margin”.
Patrik Riese, the managing director of Volkswagen Financial Services SA with the responsibility for sales and marketing, said the new entity aimed to promote the sales of group brands by offering attractive products and services and to increase their current finance penetration rate through individually tailored offers for Audi and VW customers.
He said the new joint venture would also reinforce the relationship between the dealer and customer. “A first step in this direction is our offer of fully comprehensive cover in the form of a unit price insurance policy [flat-rate insurance] for selected Audi and Volkswagen models. The flat rate model provides a fixed insurance rate irrespective of the driver’s risk rating or claims history.”
De Kock said WesBank’s strategy was always to enter into partnerships and it had a partnership and revenue share arrangement in its previous joint venture with VWSA.
This revenue share arrangement had now been shifted from VWSA to Volkswagen Financial Services in Germany and they were hoping to grow their revenues from this new venture.