German carmakers tapping onto used-car market for more profit

Article by Anita Panait, on June 22, 2013

German carmakers BMW Group, Mercedes-Benz and Volkswagen Group are making a push to cash in on the growing demand for used vehicles in their home turf as they look for more ways to offset the effects of the shrinking new car market. According to data from the Federal Transport Authority, new cars sales in Germany dropped 10 percent in May 2013. The carmakers’ push, which includes leasing offers as well as fast-track loans, are aimed at enticing buyers to acquire models beyond the reach of many consumers.

Franz Reiner, head of Daimler's banking unit, remarked that that for used Mercedes-Benz vehicles, they could make financing decisions in less than 15 minutes and “offer very attractive conditions." Reiner noted that used cars “offer an entry into the Mercedes-Benz world.” The used-car market is becoming a good source of profit for carmakers who are struggling to increase deliveries of new cars in Germany this year.

According to car-lending association AKA, loans and leasing deals on second-hand vehicles surged 10 percent to EUR8 billion in Germany in 2012. In fact, almost 6.9 million vehicles changed owners in 2012, which is more than double new-car sales. To tap this growing market, VW started operating in April 2013 its Leasingboerse Web site, which offers company-owned used vehicles.

For this week, a lucky buyer could get his hand on a used silver 2012 Golf hatchback that has less than 3,000 kilometers (1,865 miles) on its odometer for just EUR152 a month with no money upfront on a three-year lease. A new model would cost EUR233 monthly with no money upfront on a three-year lease. According to Lars-Henner Santelmann, head of sales and marketing at VW's financial services unit, the carmaker target to increase the number of used-car financing deals in Europe by 50 percent in the next three to five years. [source: Bloomberg]

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