VW Credit Inc. has made an equity investment into the online origination portal AutoGravity and is both joining the platform as a captive lender and utilizing the company’s technology to create its own branded online financing mobile app, according to a Wednesday press release.
AutoGravity declined to disclose the sum of the investment to Auto Finance News.
Consumers on the 1-year-old AutoGravity app can now secure new-vehicle leasing, and new or used retail loan financing from VW Credit, Serge Vartanov, Auto Gravity’s chief marketing officer, confirmed to AFN. AutoGravity is active in 49 states — excluding Nevada — and VW Credit is offering financing through the app across all those markets.
Separately, consumers can download a new branded app simply called Volkswagen Credit on their Android or iOS devices. The app is powered by and nearly identical to AutoGravity, except consumers can receive new-vehicle retail loans or leases exclusively on Volkswagen models, rather than shopping around for different brands. The app can be downloaded nationwide but financing is only available in Virginia and Maryland today, with plans to expand nationwide in the coming weeks and month, Vartanov said.
“Captives are an integral part of leasing,” Lukas Wickart, AutoGravity’s chief financial officer, told AFN last week prior to the official announcement of the VW partnership. “There are a lot of brands that can’t offer leasing, but our goal is to offer loan and lease on every brand, make, and model.”
VW Credit joins a diverse crowd of financial institutions already lending on the platform, including Mercedes-Benz Financial Services USA, First-Investors Financial Services, Westlake Financial Services, and CarFinance.com. AutoGravity intends to keep adding lenders to the platform, but admits that there will come a point where there are diminishing returns for both the consumer and the lenders.
“On the captive side, obviously you want to have each and every one because when it comes to leasing, you mostly need a captive,” Wickart said. “On the financing side, we don’t want 100 lenders on the platform, and create massive competition. We want to selectively have a handful of partners. We are thinking 20 to 25 probably.”
Consumers are increasingly demanding a mobile experience, said Horst Meima, president and chief executive of VW Credit, in the release. That’s why VW turned to AutoGravity, and the startup believes other captives are soon to follow.
“We are also in conversation with a few more captives,” Wickart said. “There are some very concrete conversations happening.”