Volvo Car Financial Services is developing 12- and 18-month lease products as a tool to bridge consumers between cars, Tony Nicolosi, the captive’s president, told AFN.
Though the product will likely have a limited customer base, Nicolosi expects that it will help keep consumers coming back to the brand.
Typically, finance companies avoid extending lease terms beyond six months, a problematic scenario for consumers whose term is ending, yet they are eyeing new models that won’t be released for another year, for example.
“[Today] if you were within three months of the new model, I’d offer you a lease extension, no problem, but now I need something that gets me out 12 months,” Nicolosi said. “I don’t see a huge take rate on it, but we don’t want to lose [the consumer]. We want to get them in the next car.”
Nicolosi declined to offer a timeline for release. The “majority” of the company’s lease business falls in the 36-month category, he said, but Volvo also offers traditional leases as short as 24 months, and “single payment” leases — an upfront payment that’s cheaper than making monthly installments — that are less popular, he said.
Exploring these short-terms leases also helps prepare the captive for the future of mobility.
“Down the road when there is mobility by the mile, by the day, by the week, by the month — these are all going to be things that are potentially out there — we have to figure out solutions from the financing side to support the OEM,” Nicolosi said. “So these are all things we’re investigating and we’re working very hard behind closed doors.”
