April 15, 2011: Joern A Kurzrock

Volkswagen Finance was registered way back in January 2009 and granted a licence only now. What did you do in the interim?
We have spent the interim period doing our homework. As you know, there are many captive companies but not all are success stories. It took us a while to understand what they did right and what they did not and finally, we wanted to be sure that we do the right things to set up a sustainable business.
What did you find about the players which didn't do well?
I would rather focus on the potential here. We believe that our business model is successful and the reasons are many. We are here because of the growth of the market and the strategic investment that Volkswagen has made on the one hand, and the share of cars being financed, on the other. We also believe that we have a captive business model that has been successful in 38 other countries. So why not in India?
Will you graft plans from those markets for India?
There is no market in the world that is quite like India. So, yes, we are learning from the experience of other markets but let me assure you that there will be no cut-copy-paste. The leverage on other markets in terms of product development is one way we can learn and modify for other markets.
Are you looking for leverage from BRIC countries?
I am no expert on other BRIC nations. Look at China with which India is often compared. But from a perspective of financial services, only 10 percent of cars in China are financed. India is so much bigger at 60-70 percent. China’s automotive market is, of course, bigger. I would not compare either Brazil or Russia with India. We have developed an India-specific business model and have taken into account very India-specific parameters. In the sales channels, we are selling through the network which is not a miracle but we are placing our own finance and insurance expert or a support team, if you like, at the dealer end. We are also selling a wide range of automotive services which include insurance around the car, standard warranty, add-on insurance, annual maintenance packages as single as well as bundled products. We are customising this for the Indian customer. This is, in essence, not just pure finance but goes far beyond that. This is our USP. We know that customers are ready for products that go beyond pure finance. The customer wants to know what is the total cost of ownership. So we combine automotive with finance knowhow and are bringing out a true mobility product.
At a macro level, what does the government’s anti-inflationary stance mean for you?
This is what every player faces and we have to cope with it like the rest. But with interest rates going up, the customer looks for security. In these uncertain times, they are looking for security and we will give them that as well as total transparency
You will finance the entire range from the VW Polo to Skoda Superb. Does any car pose a challenge?
We have launched three product labels – Audi Finance, Volkswagen Finance and Skoda Finance. Behind this, we have people who are supporting the brand and developing products. So the Skoda Superb buyer will have a different expectation from another brand. We will try and offer the right product, not a generalised one, for the right buyer. We are looking at brand value proposition and need, and are trying to develop win-win products.
Volkswagen has been on an ad blitz. Is it a hard act to follow in the finance arena?
We are going to go together with the brands and you will see more advertising and in which you will see the element of Volkswagen finance. We will run campaigns with each brand and in cooperation with the brand.
What targets have you set for yourself?
In 2018, as you know, Volkswagen’s declared target is to be the market leader worldwide. As regards India targets, we want to be on an eye level with the key players in each segment. The figures are changing, and we want to do this soon. There is buyer demand for our products which are innovative, transparent and intelligent. We want to bring out financial products as attractive and emotional as the cars that Volkswagen sells. We wish to be one of the largest captive companies in the market. Yes, we are new in the market but there is enormous potential and we can do it profitably.
Finally, given your plans for India, how do you plan to get the right people?
You will work with dealers. So, what is the challenge? We are the finance partner for the dealer network. If you look at the brand, dealer and customer as a triangle, we are in the very centre. We will focus on factoring, stock finance and later on, term loans and investment finance. We have spoken to dealers to understand their requirements. Like dealers anywhere in the world, they will look for additional revenue sources. So we are offering products like maintenance products which help the dealer. We are looking at business that goes beyond the ‘commission’ bit. Indeed, we are leveraging our experience from other countries and also developing products that go into a toolbox that other markets might pick up. We are starting with 120 people. I considered hiring to be the biggest challenge but I did not count on the Volkswagen image. When we went out to look for senior management, we received a very positive response. We have hand-picked our team and are proud of them. As a global player, we can offer many opportunities for people to grow. We are going to grow this initial team to 300 by the need of this calendar inclusive of the personnel stationed at dealers. Further increases depend on our plans but 300 in a ramp up is significant. Age-wise, we have chosen people who are in the mid-30s and older. They had smart questions to ask us about what our business model is and after being satisfied, signed up. Our package includes a good salary but that is a part of it and is not unrealistic. We will train them for the needs of our captive business.