While BMW Financial Services’ originations were down for the third quarter, full-year volume remains up, according to the company’s third-quarter earnings on Tuesday.
Globally, 435,026 new contracts with retail customers were made in the third quarter, a decline of 7% year over year. However, the first nine-month period saw a year-over-year increase of 2% to 1.36 million new contracts.
Retail loan contracts fell most sharply by 9.1% when compared with the same quarter the year prior. However, lease originations declined as well by 2.7% year over year. BMW doesn’t break out specific U.S. financing numbers but acknowledged challenges in the market.
“In the USA, the steep increase in [sales] seen in the years following the global financial crisis has come to an end for the time being,” according to the report. “Competition in the Americas remained fierce throughout the third quarter of 2017.”
The lender’s leasing penetration is down to 32% for the nine-month period, compared with 34.2% at yearend 2016. That corresponded with a “significant” rise in pre-owned sales to 298,624 used-vehicle contracts signed year to date — up 10.2% when compared with the same period the year prior.
Lower originations are in part due to restrictions placed on the Chinese financial sector, according to the report. BMW’s Chinese leasing contracts for the quarter were down 2.7% while new credit financing contracts fell by 9.1%.
“The development is attributable to a limitation in the volume of new business in China imposed by the People’s Bank of China as part of its strategy of regulating the banking and financial services sector,” the report stated.
Yet, the Asia/Pacific region as a whole managed to grow 8.2% over the nine-month period. Globally, BMW Financial Services holds 4.9 million contracts outstanding — up 5.2% compared to yearend 2016.
