VOLKSWAGEN is pioneering an innovative way to promote its Passat saloon by offering top leasing companies support on residual values. The scheme does not provide a residual value guarantee, but will underwrite any shortfall between a leasing company's forecasts and Volkswagen's higher predictions.

The Passat is still suffering a hangover from the chronic supply problems which blighted its launch. This led leasing firms to forecast pessimistic residual values in order to make the car less attractive on contract hire rates, rather than take orders which they could not supply.

Volkswagen's solution is to offer leasing companies a 'comfort factor' on residual values. If the leasing company agrees to inflate its forecast residual value for the Passat saloon to match VW's prediction, Volkswagen will underwrite the difference between the two, provided that the original forecast equals or exceeds the CAP Monitor view, and that the company will work with VW in remarketing the car.

Bernard Bradley, Volkswagen's head of national fleet sales, said: 'Our view is that we will never have to pay the difference because we know how we will remarket the cars in three years' time and we are confident they will achieve their residual values anyway.'