Volkswagen Financial Services UK (VWFS), the finance arm of Volkswagen, has reported a £352.9m loss for 2025. This loss follows a £725m provision set aside for anticipated expenses under the City watchdog's industry-wide car finance redress scheme, according to new account filings.
Without this provision, VWFS stated that its profitability would have increased, as revenue rose to £3.41bn from £3.14bn in the prior year. The firm had recorded a £110.3m profit in 2024.
VWFS, alongside Mercedes Benz's finance arm and CA Auto Finance, has initiated a legal challenge against the Financial Conduct Authority's (FCA) redress scheme. They argue that the scheme unlawfully assumes most customers suffered a financial loss if commissions were not clearly disclosed. Volkswagen maintains it supports redress for genuinely disadvantaged customers but has identified issues requiring independent consideration, particularly concerning how the scheme applies to a captive lender model.
The FCA's scheme, which reduced lenders' overall bill to just over £9bn from an estimated £11bn, was outlined in March. Opponents are reportedly increasing pressure on the FCA to release communications with the Treasury and modelling data for the programme, with the FCA branding these requests as "fishing expeditions."