Volkswagen To Offer Follow-Up Guaranty For New Cars

As of 2011, Volkswagen AG's (VLKAY) financial services unit will offer follow-up guarantees for new vehicles on its own, instead of through its partner Allianz SE (ALIZF), to support growth with new services for cars, Lars-Henner Santelmann, board member of Volkswagen Financial Services said late Monday in Hanover.

The follow-up guaranty covers repair costs after the legally compulsory two-year manufacturer's guaranty ends, if needed for the entire lifetime of the car.

"We see great potential here," Santelmann said.

Around 42% of the buyers of new cars immediately book a follow-up guaranty for their car to cover any unforeseen repair costs, Santelmann said. Over the past six year, the number of insurance policies quadrupled to around 900,000, he added. The annual fee, which depends on the size and age of the car, is around EUR100 on average, he said. Overall, the premium payments amount to EUR90 million per year, he said, adding this is the business Volkswagen wants to attract. The comprehensive and liability insurance will still run through its partner Allianz.

-By Katharina Becker, Dow Jones Newswires, [phone], [e-mail]