Volkswagen has applied the brakes on plans to launch a banking service in the UK, because of the uncertainty and increased competition in this market.
VW was granted a UK banking licence two years ago, and said it would be offering telephone and Internet banking.
The car company wanted to extend its customer base beyond car buyers, but the launch of dozens of new banks over the past 12 months has made VW rethink its strategy.
A VW spokesman says: “The launch has been put on hold because the UK market is not right.”
The company pledged to spend millions on the launch with products being modelled on the company’s German banking business. They included current and savings accounts, credit cards, and other banking products.
VW German operation, Volkswagen Bank GmbH, is one of the largest direct banks in Germany. It was started in 1949 and holds deposits worth £1.1bn.
The bank would have complemented VW’s financial services division, which was set up in 1994 and offers business development loans to VW dealers and hire-purchase deals to car buyers.
If VW had gone ahead with its plan, it would have been the first car company to launch into mainstream banking services in the UK. Rivals, including Ford and General Motors, have already forged links with credit card operators such as MBNA.
There has been speculation that DaimlerChrysler is targeting both banking and insurance companies as possible acquisitions.