Volkswagen will stop issuing loans to Audi and VW in the U.S. through its in-house captive finance company, Volkswagen Financial Services, and will instead send that business to Wells Fargo starting in April.
“Following this transition, VWFS will focus on consumer leasing and usage-based products, including mobility solutions, supporting the Volkswagen Group’s growth strategy in the U.S.,” stated a joint press release announcing the move on Sept. 16. The release called the partnership a “multi-year co-branding agreement.”
A slide about the transition was provided to Automotive News by a person briefed on the plan, who asked not to be identified disclosing private information. The slide described the captive’s new role in the U.S. as consumer marketing, referring borrowers to Wells Fargo, managing and maintaining the dealer base and managing the brand. The slide said Wells Fargo would be responsible for processing auto loan applications, handling underwriting, making credit decisions and servicing loans. Volkswagen Financial Services will continue to service loans that remain on its books after the April transition, according to the slide and the news release.
Volkswagen did not respond to an email sent mid-afternoon on September 16 asking for confirmation of the information on the slide.
“This is a joining of great forces, as Volkswagen Financial Services US will continue to be the host of automotive expertise supporting our brands, dealers and customers, while Wells Fargo will join us to offer its retail financial services capabilities and comprehensive balanced book to deliver excellent retail solutions,” VW Credit CEO Ernst Jan van Eijkelenburg said in a statement.
Volkswagen Financial Services will also begin referring U.S. customers of the Ducati motorcycle brand to Wells Fargo at some point after it begins making recommendations for Audi and VW loans, according to the news release.
“We continually evaluate our global business to make bold decisions that best position us in each of our markets,” Volkswagen Group of America CEO Pablo Di Si said in a statement. “By aligning to respond to evolving market dynamics through this partnership, we are able to more effectively support the needs of Volkswagen, Audi and Ducati, while also providing tremendous opportunities for Volkswagen Financial Services in the U.S. market in the future.”
Volkswagen also did not respond to questions about how the automaker’s loan subsidies and underwriting criteria for borrowers would change from VW’s captive loans today to those routed through Wells Fargo.
“We are proud to work with Volkswagen Financial Services US to take another significant step forward in the ongoing transformation of our Auto business,” Wells Fargo Auto CEO Tanya Sanders said in a statement. “Our two companies share a commitment to continually innovate and create great experiences, and this relationship will deliver a superior experience for VW, Audi and Ducati dealers and customers.”
According to a Volkswagen Financial Services employee who asked not to be identified, executive leadership said the organizational change would occur because of the partnership with Wells Fargo, but did not provide details. However, team leaders anticipated major job cuts in the U.S. operation would come, the employee said. Volkswagen did not respond to a request for comment about the employee’s account and assessment.