Maruti Suzuki to examine captive finance company for easy loans

Updated: September 6, 2019 10:40:52 AM

With passenger vehicle sales staying subdued for over a year now, banks have been cautious in lending to dealers to purchase stock on fears of default, as inventory has risen to above-normal levels.

maruti suzuki cars, maruti suzuki share, maruti suzuki swift, maruti suzuki xl6, maruti suzuki xl6 price, maruti suzuki showroom in noida, maruti suzuki baleno, maruti suzuki ertiga, maruti suzuki dzire, maruti suzuki arenaMaruti Suzuki is also in talks with banks to ease their strict lending norms, and has tied up with more such financial institutions to facilitate easy loans to dealers and individual customers.

By- Pritish Raj

Maruti Suzuki will examine the possibility of having a captive finance company, which will help in reducing dependence of its customers and dealers on banks and NBFCs, which have been cautious in lending following a year-long slump in vehicle demand.

Shashank Srivastava, executive director, sales and marketing at Maruti Suzuki, said globally manufacturers have captive finance companies which are successful. “We will examine the option and look at India-specific requirements,” Srivastava told FE.

With passenger vehicle sales staying subdued for over a year now, banks have been cautious in lending to dealers to purchase stock on fears of default, as inventory has risen to above-normal levels.

Maruti Suzuki is also in talks with banks to ease their strict lending norms, and has tied up with more such financial institutions to facilitate easy loans to dealers and individual customers. “We are working on retail and dealer financing and have brought on board new banks like Bank of Baroda and Federal Bank to increase exposure. We have also asked them not to insist on high collateral and they have agreed,” Srivastava said.

Earlier, banks used to lend without asking for a collateral as stocks with dealers were considered as a security and repayment was done once those units were sold. Due to the slowdown in demand, dealers are unable to repay loans they have taken to buy stocks from the manufacturer, prompting banks to ask for a collateral which went up to as much as 50%. Around 80% of Maruti Suzuki cars are bought on loans.

Two-wheeler makers, including Hero MotoCorp, Bajaj Auto and TVS Motor Company, have in-house financing companies. Among four-wheelers, Tata Motors, Mahindra & Mahindra and Toyota have captive financing units.

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