Wednesday, October 24, 2012

Banks to drag finance companies of car makets to CCI - ET

The leading luxury car players, BMW, Merc, VW family ( VW, Audi & Skoda) and Toyota have all pushed for volumes through their internal finance outfits. 'A unfair trade practise', feel the leading players in banking area, SBI, HDFC, ICICI, etc.
  • Unfair to banks ? May be... Sour grapes or genuine interest for customer, who may not get best deal ?! :)
  • Unfair to customers? May not be. The smart customer will go for the best deal. But then, the best deal may not be really 'the best', when there is internal subvention among the manufacturer and in-house finance company
  • Unfair to their own brand & long term strategy ? May be... because, by pushing internal finance outfits, they will be shutting off support from banks. Losing an opportunity to tap banks' existing customers. Remember Fiat's FISAF? Maruti grew when they looked beyond few preferred financier-players
  • Does the issue deserve to be taken up at C C I by these top banks? Perhaps over-reacting!!
What about similar arrangements for trucks ( Tata, AL) and far-equipment (M&M). Also, what about two wheeler finance ( Bajaj)? Here customers can complain banks are not supporting enough.  PSU banks are not there in CV Finance. Private banks are not uniformly aggressive, in view of the cyclicality of CV industry. Some leading private banks have exit two-wheeler finance.!!

Food for thought !


Anonymous said...

The customer of today is well aware of the best deals and is not willing to compromise on the service standards too . Its true the captive finance companies will have an advantage over others,but then the cake is getting bigger for everyone to share .Whoever offers the best rates,excellent service will keep growing their share .

Subs said...

In many cases, customer in under misplaced sense of confidence of being 'fully aware' :) And taken for a sweet ride !

Subs said...

Interestingly CEO of ICICI Bank was asked by a reporter, when she met the media to announce Q3 results.

I felt it was a small question to be put to the CEO of India's No 2 bank - afterall, auto finance is a small part of the bank's total portfolio. Among car manufacturers, there are few in-house finance companies, to make CEO of the bank to sit up & notice.

Ramana Kumar said...

Not a bad idea ! 'Level playing field for all' is best for customer. on a different note, i recall that 60% of GE profits were coming from GE Capital, its financing arm, in its salad days ! GM's car financing arm covered up losses in the car business for years ! Indian balance sheets are rather more simple, at least for now. But financing is best left to the financiers !