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Customized car financing plan free car owners from worries [China Daily: Hong Kong Edition]
[March 29, 2014]

Customized car financing plan free car owners from worries [China Daily: Hong Kong Edition]

(China Daily: Hong Kong Edition Via Acquire Media NewsEdge) Joern Kurzrock, CEO and general manager of Volkswagen Finance China Co, gives a speech on March 26, 2013 in Beijing to journalists. [Hao Yan /] Volkswagen Finance China Co is set to launch its first customized loan plan in China this year during its 10-year anniversary. It aims not only to make a car more affordable, also relieve owners from maintenance troubles.

The German financing company's new driver plan can cover safe driving training, part of the driver's license fee, and car maintenance could also be considered together as a package.

Young customers may choose ascending plans, which offers easy access to favorite cars. They may prefer to have a car earlier, and gradually pay more as their incomes grow.

"Chinese customers are really smart," said VW FC CEO and General Manager Joern Kurzrock. "A smart young man would buy a car on loan, though it is not popular traditionally." A customer may use the money in a more efficient way to generate more profits. For example, one pays 20 percent for a car, and buys a banking service that uses the rest of the cash to make 5 percent or more earnings.

Given the Volkswagen Finance's car loan interest rate from 0 to 3.99 percent, a customer may have 3 percent paid for the loan, and still keep 2 percent earnings from the banking service continuously.

In the entire Chinese market, about 18 to 19 percent of total customers bought a car on loan last year, up from the 5 percent penetration rate in 2004.

Models at China's Hainan auto show Hot girls at Geneva Motor Show 2014 China's financing business is climbing, as consumer demands for vehicle financing is growing, and the financing is more and more perfectly integrated into car makers' sales activities.

The VW FC also had a record year with 227,279 new contracts, an increase of 52 percent compared with 2012, according to the Volkswagen Financial Services AG's annual report.

"It is not only about affordability. It's worry-free," said Kurzrock.

Some customers may select descending plans, as they have abundant cash flow in their current earnings. They will not make an assumption on future income, and make less payment gradually.

In some very rare cases, the financing company will assist in liquidating the car when a customer has difficulties paying back the loan. The company will sell the used-car to a dealer, and the customer will still have a cash surplus after settling the remaining loans, according to Wu Yan, marketing and PR department head at VW FC.

"Chinese customers on average hold a car for four or five years, so the total cost of ownership is the focus," said Kurzrock.

Kurzrock sees the future innovative product as a pack that has all related services with the car, including financing, insurance, maintenance and repairs.

"A Bentley owner doesn't care about the maintenance expense, but it is the reliable and predictable service that interests the customer," Kurzrock continued.

The company CEO and general manager requires a win-win-win scenario in each customized plan to benefit the customers, the brand and also the dealers. VW FC had established cooperative relations with about 1,900 dealers in 270 Chinese cities by the end of last year.

"We serve customers with both automotive and finance hearts," said Kurzrock.

  Models at China's Hainan auto show Hot girls at Geneva Motor Show 2014 (c) 2014 China Daily Information Company. All Rights Reserved. Provided by, an company

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