Skoda Auto will set up Skoda Finance in India by the end of the year, following Bajaj Auto, Tata Motors, Maruti Suzuki, Hero Honda and Mahindra & Mahindra who all have their own finance subsidiaries.
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Most Indian banks and other lending institutions have recently tightened lending while interest rates have also been on the rise.
According to a Skoda Auto India spokesman, 80% of vehicle sales are financed.
The automaker entered India just seven years ago and has an assembly plant in Shendra, Maharashtra.
It currently sells four models in India – the Fabia hatchback plus three sedan lines – through 56 dealerships and is set to increase the network to 75 next year when it will add SUVs, MUVs and a small car priced below the Fabia.
Sales increased 34.8% year on year last month to 1,213 units with the Fabia alone selling 486.
Skoda has targeted 20,000 units this calendar year versus 13,000 in 2007.
Kevin Jacobs
