The Hindu Business Line : Mahindra co, Syndicate Bank tie up to offer pre-owned car loans at 9%

Thiruvananthapuram, Nov. 11 Mahindra FirstChoice Wheels, a multi-brand pre-owned car company from Mahindra and Mahindra, has tied up with Syndicate Bank to provide finance at an ‘industry-first’ 9 per cent.

In the unorganised sector, pre-owned car loans command an interest of 16-17 per cent, according to Mr Rajeev Dubey, President (HR, After-Market and Corporate Service) and Mr Shubhabrata Saha, CEO, Mahindra FirstChoice.

ORGANISED SECTOR

“Only 10 per cent of the pre-owned market is in the organised sector and this small base allows us to work our way around with this sub-10 per cent loan scheme. This is an entirely new ball game,” they told Business Line.

The projected demand is also very high. This gives Mahindra FirstChoice the confidence to drive the ultra low-interest loan campaign with Syndicate Bank.

The ownership ratio of fresh-minted to pre-owned cars is currently 1:1 in the country. This ranges from 1:2 to 1:2.5 in the US and other western countries.

And this is where India too is driving itself to. The abysmally low ownership for every thousand people and gains from demographic dividends combine to build a huge pent-up demand.

Monthly sales of pre-owned cars in the country average 10,500 units. Of this, Thiruvananthapuram alone accounts for 1,600. “This is precisely why we are here,” Mr Dubey said.

BIZ MODEL

The intention is to grow this market like it has never been able to before. “We are fortunate to have a partner in Syndicate Bank, which is convinced of the business model based on stringent valuation, right pricing and unwavering focus on quality,” Mr Saha said.

Banks set great store by the valuation, pricing and the quality aspects.

The company buys only 20 per cent of the cars it evaluates, and goes on to refurbish and certify them through a 118-point check system.

It also offers registration, insurance and documentation services on the spot. Roadside assistance 24/7 is another highlight.

Thiruvananthapuram is the 102nd showroom of the company. It plans to ramp up this number to 300 across the country in three years.

“We are a long-term player and have targeted sales of 1 lakh cars by year 2015. This is where the real volume play begins,” Mr Dubey said.

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