Scania annual report 2002

Customer financing
Customer financing is a well-established
field of operations in most of Scania’s main
markets.
These activities contribute to the company’s
overall earnings and growth, while
strengthening the competitiveness of Scania.
To meet the needs of customers in new
markets and increase Scania’s business
opportunities, a number of new finance companies
were established during the year.
Customer financing is an important element of Scania’s
complete product range. The company endeavours to
work locally in its Customer Finance operations. Proximity
to the customer and local know-how makes the pro-
Continued positive trend
The income of Scania’s Customer Finance operations
rose by 11 percent to SEK 308 m. (278). This was
equivalent to an operating income of 1.22 (1.19) percent
of the year’s average portfolio. Overhead, expressed in
relation to the average portfolio, rose from 0.97 percent
in 2001 to 1.05 percent in 2002.
Total financing volume rose to SEK 25,303 m.
(25,091). During the year, 11,742 (12,109) new trucks,
407 (458) new buses and 2,953 (2,498) used Scania
vehicles were financed. The number of contracts in the
portfolio at year-end totalled 59,472 (54,028). Of the
total portfolio, 33 percent was operating leases. The
remaining 67 percent consisted of loan financing and
financial leases.
cessing of applications faster and improves the quality
of credit evaluation.
Scania’s strategy is to establish its own finance
companies in markets with sufficient sales volume. In
other markets, distributors are supported by financing
solutions from the subsidiary Scania Credit AB.
Europe
Scania’s Customer Finance operations in Europe now
consist of thirteen Scania-owned finance companies.
In some western European countries, portfolio
growth halted due to lower sales volume.
However, growth occurred in the Italian company
and in Spain, due to a large element of bus financing.
Operations in central and eastern Europe, which
take place through the company Scania Credit, continued
to show good growth.
In one of these markets, Russia, a finance company
was established to be able to offer Russian customers
domestic financing as an alternative to the cross-border
financing offered via Scania Credit.
Asia
Financing operations in South Korea have taken place
since the beginning of 2002 through a Scania-owned
finance company. During the year, the company refined
its financing range. Processes were trimmed and staff
received further training in order to meet the high
standards required in this market.
Latin America
In the Latin American market, Scania offers financing in
collaboration with outside lenders. In the uncertain eco-
Total assets in finance
companies
SEK m.
30,000
25,000
20,000
15,000
10,000
5,000
0
99 00 01 02
Operating income
and net margin
SEK m.
300
nomic situation that has prevailed, Scania assumes a
limited portion of the credit risk.
Beyond this, Scania in Brazil offers a customerfinanced
savings programme, in which customers are
organised into consortia. Through regular savings in a
consortium, customers are guaranteed the allocation of
vehicles within the savings period. During 2002, 42 (37)
percent of sales in Brazil were made via consortia.
Risk exposure
In recent years, Scania has done extensive work to
ensure that it can handle customer financing risk even
better. This includes management of credit risks as well
as financial risks and operational risks.
Scania’s Customer Finance operations are responsible
for the credit risks in the group of finance companies,
while financial risks are managed by Scania at
200
100
Operating income
Net margin as a
percentage
of average
porfolio
0
99 00 01 02
%
1.5
1.0
0.5
0
44