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Taking a leaf out of car manufacturers' strategy book, Shriram Transport Finance Company (STFC) is planning to set up ‘Auto Malls' for second-hand commercial vehicles, including trucks and passenger carriers.
First time
This is probably the first time that a non-banking finance company, which specialises in financing second-hand commercial vehicles (CVs), is foraying into the trading of used vehicles.
Over the last few years, car manufacturers such as Maruti, Hyundai and Tata Motors have established outlets for buying and selling used cars in order to lure existing car owners to upgrade to newer models. STFC's mall will be along similar lines.
Among others, STFC is eyeing opportunities to earn commission from the sale – either on as-is-where is basis or refurbished - of used CVs and the opportunity to finance them through the Auto Malls.
Subsidiary
STFC has floated a subsidiary company, Shriram Auto Mall India Ltd (SAMI), to set up auto malls in 60 centres across the country. Plans are afoot to open auto malls on the outskirts of Chennai, Mumbai, Delhi and Baroda over the next few months.
Each auto mall will be spread over five to 10 acres on the outskirts of city limits abutting national highways, according to Mr R Sridhar, Managing Director, STFC.
“Today, the used vehicles space is dominated by individual brokers. The buyer can't meet the seller. We are trying to organise the used CV market. Hence, we are putting in place the infrastructure required for trading of used commercial vehicles. Our auto mall will be a meeting place for buyers and sellers. All transactions will be transparent,” said Mr Sridhar.
Features
At any given time up to 300 CVs will be on display at each auto mall. Infrastructure such as a workshop for repairing and refurbishing the vehicles, ‘dhaba' (eatery), dormitory for the truckers, and spare-parts shops will also be part of the mall. It will be developed as a one-stop shop to meet all the requirements of CV operators.
SAMI will provide warranty to the trucks refurbished by it. The company will also tie-up with a general insurance company to provide third party insurance cover.
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