Vw has no problems at raising money to finance auto loans

Article by Christian A., on March 13, 2012

Volkswagen has an easier time at raising money to finance auto loans than its European rivals (which have mounting debts). At Volkswagen’s annual press conference last Monday, it revealed that at the end of 2011, it had a net liquidity in its auto operations of 17 billion euros ($22.3 billion). It predicted that its profits in 2012 would be stable compared with other European carmakers such as PSA/Peugeot-Citroen, which has a net debt of 3.36 billion euros and Renault with a debt of 299 million euros.

Philippe Houchois, a London-based analyst with UBS, said that VW can be more aggressive on financing than the French carmakers since it could raise money cheaper.

Automakers experience rising pressure to finance their own sales as commercial banks in Europe have moved to cap their exposure to auto loans due to the sovereign debt crisis in the region.

Last month, PSA revealed plans to partner with General Motors Co. Meanwhile, Fiat said that to have a chance at beating Volkswagen, the region has to have more consolidation.

Moody's Investors Service’s rating for Volkswagen is A3, which is four levels higher than both PSA and Renault. Volkswagen sold 8.27 million vehicles last year, enabling it to hit record profits. This means more savings when trying to take cash from investors.

Data from Bank of America Merrill Lynch's European autos index indicate that on a loan of 100 million euros, PSA will need to pay around 2 million euros higher in annual interest than Volkswagen. Meanwhile, Renault's financing costs would be 1.4 million euros more a year. Fiat is rated Ba2, one level lower than the French carmakers. Fiat is relying on a joint venture with Credit Agricole for its auto loans. [source: BusinessWeek]

Topics: vw

If you liked the article, share on:

Pin It

Comments

Recommended

Has Toyota started the production of a new electric supercharger? Well, a patent that was recently published indicated that they might have. And this electric supercharger looks more durable and...
by - March 27, 2017
The Tesla Model S has finally arrived in South Korean soil and is now available for test drive. But, there’s a catch. You’ll have to wait several months if you...
by - March 27, 2017
Sorry to say this to the Sport Quattro Concept fanatics. If you guys have been hoping for the production of this iconic concept to begin, prepare for your dreams to...
by - March 27, 2017
South Korean car company SsangYong recently revealed sketches of their upcoming SUV. We’re not always impressed by Korean car designs, but this one looks quite promising. Yup, it is the...
by - March 26, 2017
Twenty-eight years after the company was first launched by Toyota, which was initially targeted to the United States market only, Lexus has already made its way to over 70 countries....
by - March 26, 2017
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries