Mahindra Finance To Foray Into Financing Two-Wheelers, Consumer Durables
KOLKATA: Mahindra & Mahindra Financial Services, or Mahindra Finance, is ready to venture into two-wheeler financing as it looks to cash in on the growing demand for two-wheelers in India, with leading manufacturers managing to sell over 2 crore units in a single financial year.
The non-bank lender will be looking to get its share in the fast-growing but a crowded two-wheeler financing market, a decade after its parent Mahindra & Mahindra entered the highly competitive industry through the acquisition of select assets of Kinetic Engineering.
This is part of Mahindra Finance’s expansion strategy in FY19. It is also looking to get into consumer durable financing in a couple of months, managing director Ramesh Iyer told ET.
Iyer expects rural market to drive India’s economic growth in the next couple of years. “We are adding two product lines this fiscal as we plan to improve our penetration in the rural and semi-urban markets,” Iyer explained.
He said the company has run pilots for six months for both two-wheeler and consumer durable financing and have seen good results. The lender may initially provide loans for purchasing two wheelers manufactured by Mahindra & Mahindra but it would eventually finance all leading brands.
Mahindra & Mahindra holds 51.19% in Mahindra Finance.
India is the world’s largest two-wheeler market, which is expected to see double-digit growth this fiscal with the economy hitting the recovery path. The last time the two-wheeler industry saw double-digit expansion was in FY12 when it registered sales of 13,435,769 units, 12.25% more than the preceding year.
Mahindra Finance, India’s largest tractor financier, has a loan book of Rs 51,000 crore at the end of March, and has a customer base of over 53 lakh. It is primarily in the business of financing new and pre-owned auto and utility vehicles, tractors, cars, commercial vehicles, construction equipment, and SME financing.
“We are setting up digital platforms to push the two new product verticals, which require separate skill sets compared to what we have now,” Iyer said.