Indian vehicle makers are looking at financing customers’ purchases as a means of increasing earnings, reported Reuters.
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The vehicle finance market in the strongly growing market is estimated at around INR312 bnn (US$7bn), and is forecast to grow around 20% a year in the next five years. Banks and other finance companies currently account for around 85% of the market.
Mahindra Finance currently takes about 70% of its revenue from financing Mahindra & Mahindra vehicles, and is gearing up for expansion by raising up to IBR4bn ($90 million) from an initial public offering this week.
Tata Motors has said it would like its Tata Finance operation to fund 40% of its own vehicles in 2-3 years, up from 23% at present, and enter other automotive financial segments such as insurance and fleet management.
ICICI Bank, HDFC Bank, Kotak Mahindra and State Bank of India are some of the major automotive lenders not linked to vehicle makers.
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