The automobile market in India is at a developing stage and shows signs of significant growth. With the leaders of the automobile industry experiencing a welcome demand for their products, they have taken superior customer experience a notch further – by means of in-house financing. Mr. Kirti Maheshwari, Head of Sales & Distribution, Volkswagen Financial Services, gives a detailed insight on the current situation of the Indian car finance market and the importance of Captive Financing.
The Indian Finance Market
The Industry perspective of finance sees 75-80% cars being financed for A, B and C categories of cars and 85%-90% for the D, Premium and Luxury segment, where the customer pays just about 15-20% up front. This is where financers play a crucial role. According to Mr. Maheshwari, financers can broadly be divided into 3 parts – private sector banks & NBFC’s, nationalised banks and captive financers. Automobile manufacturers have their own in-house finance division that offers finance for their manufactured cars. Volkswagen Finance is a captive financer that operates through its group dealer network being one stop shop for all customer requirements making it a seamless experience for customer Captive Financiers play a major role by offering various innovative products like EMI Holiday options, residual value products, etc., to aid dealers to sell more ,which other banks & NBFC’s cannot offer.
The dealer sales consultant is a single point of contact for the customer and plays a critical role in selling the car and with it, the financial products as well. As a captive financer, Volkswagen Financial Services does everything for you. From providing a plethora of schemes that suit your needs, to doing all the documentation work on your behalf, we make sure the only thing a customer has to do is sit back and give us the go ahead.
This dealer sales consultant, says Mr. Maheshwari, becomes a vital cog for Volkswagen Financial Services. He has the ability to forge an emotional connect with the customer as he is with you, from the beginning to the end. “A happy customer gives you many more customers,” he rightly says, as a happy customer will more often than not refer the consultant and the brand to prospective customers.
The Standard vs Structured Product
“Selling a standard product, an EMI based product, to the customer is the easiest job for a consultant. That’s where his challenge lies; to sell our structured product,” says Mr. Maheshwari who believes the slowly but steadily, the scales are tilting in favour of structured products. A captive financer offers lucrative products like Annual bullets, End of Tenure Balloon options and upgrade schemes to name a few, that provide flexible payment options to the customer and eventually aids dealers to sell more. Around 85-90% sales happen through the standard product, but with the advent of captive financing, structured products are being preferred.
Despite facing major challenges from competition in terms of rates & pricing post demonetisation, captive finance is waded through tough waters and is still growing. It offers easy payment and ensures the customer has a hassle free experience while purchasing a car. It is safe to say, captive financing is here to stay.