J.P. Morgan (JPM) reached a deal with German carmaker Volkswagen (VW) to buy almost 75 percent of its financial services unit for undisclosed terms, Reuters and other news outlets reported on Wednesday (Sept. 8). The acquisition comes ahead of VW’s upcoming launch of in-car payments technology.
Shahrokh Moinian, EMEA head of wholesale payments at J.P. Morgan, told Reuters that the connected car space — where the vehicle becomes a digital wallet for purchases — is a hot market that’s growing fast.
VW launched its financial services division in 2017 and has operations in 32 countries. The unit offers vehicle financing and leasing, in-vehicle payments, electric vehicle charging and subscription services for insurance, entertainment and more.
J.P. Morgan is planning to rebrand VW’s unit and build out the technology for use in sectors beyond the automobile market, Reuters reported. VW will maintain 25.1 percent of the business. The deal is anticipated to close in the first six months of next year.
Although VW didn’t separate earnings for its payments unit, its mid-year earnings posted in July showed that sales at its financial services division were $26.77 billion, an increase of 18 percent over 2020.
Volkswagen teamed up with Amazon Web Services (AWS) and Siemens to offer its industrial cloud services to technology and manufacturing, PYMNTS reported in July. Collaboration gives partner firms the ability to interface with VW’s facilities.
“With the Industrial Cloud we are creating a platform allowing partners to contribute their solutions. This will help the Volkswagen Group achieve global efficiencies at its plants. At the same time, we are creating the pathway for partners to scale their applications and optimize their own operations. This way, everyone will benefit,” Volkswagen AG Executive Vice President New Business Development Nihar Patel said.