Carmakers struggling to fund lease purchase sales may turn to a German government fund originally devised to bail out banks, according to a news report Saturday.
The financial services divisions of most automakers hold banking licences in Germany and could qualify for guarantees. Interest rates on those guarantees average about 2 per cent annually, which is significantly cheaper than commercial borrowing rates in the current credit crunch, dpa reported.
So far two commercial lenders and three state banks have asked for help from the Frankfurt-based German fund Soffin.
Der Spiegel, a weekly news magazine, said BMW, Daimler and Volkswagen Group had agreed to seek billions of euros in guarantees, but would not seek equity injections.
However Mercedes-Benz Bank, part of Daimler, denied the report. A spokesman said "We are not planning that."
At BMW, a spokesman confirmed Saturday to Deutsche Presse-Agentur dpa in Munich that BMW Financial Services was studying the option of a government guarantee for a bond issue to obtain fresh capital.
But he said BMW Bank, which belongs to the division, had no difficulties. "BMW Bank is absolutely healthy," he said.
The other manufacturers could not be reached for comment.
Carmakers sell a significant part of their production via leasing, or hire-purchase, agreements, whereby consumers initially take a loan out from the carmaker and only own the vehicle outright after the last payment is made. Carmakers must raise money on international capital markets to finance such deals.
The current interest rates are very high. A Soffin guarantee would reduce the market borrowing costs.
Spiegel said Volkswagen was not currently in need of such help, but feared competitors would gain an unfair advantage from state aid, so was likely to request it as well.