Global

Details

  • Industry: Automotive
  • Type: Survey report
  • Date: 9/24/2012

Finance and leasing landscape: India 

Finance and leasing landscape: India

India is a fragmented market with a high potential for automotive and finance and leasing sales growth. Car financing is well accepted in this underdeveloped market and there is an opportunity here to introduce basic finance and leasing products and to invest in the “green agenda”.

Market structure and business environment in India

Very strong market potential

  • High potential due to increasing young population, increasing demand for cars and improving road infrastructure
  • Fragmented market dominated by private and public banks (eighty-eighty percent market share)
  • Most western captives (BMW, Daimler, VW) entered market just recently
  • Some captives (Ford, GM) have already left the market (again) and instead are building partnerships with local banks

Easy access to license but often vaguely defined framework

  • Application for a Non Banking Finance Company license (NBFC) at the Reserve Bank of India (RBI)
  • Obtaining a license is relatively easy for captives with less than seventy-five percent foreign ownership
  • Broad refinancing portfolio, including funding and securitization

Serious risk potential

Risk potential - India


Business characteristics of Indian finance and leasing market

  • Relatively new and undeveloped captive business, heavy investments needed
  • High customer acceptance towards financing
  • Private customers account for between sixty to eighty percent of purchases by loan, leasing is still not very common
  • Seventy-nine percent of company cars are purchased outright with cash and increasing trend towards operational leasing

Key Findings: Evaluating future financing and leasing growth in India

Traditional F & L services
Financing Services - Expand offerings
Leasing Services - Implement basic leasing products
SERVICES
Additional vehicle services - Offer basic service products and operational leasing
Green mobility
New mobility solutions - Invest in the green agenda
BANKING
Additional banking services - Introduce basic products to create customer awareness
Full banking activities - Build a broad refinance portfolio


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automotive finance and leasing

About the study

Global automotive finance and leasing: The role of product diversification and emerging markets in future growth is based on desk research and in-depth interviews with senior executives representing key leasing and financing participants including banks, captives and independent auto leasing and financing organizations from China, France, Germany, India, Japan, Russia and the UK.

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