M&M Finance joins hands with Maruti

Mahindra & Mahindra Financial Services (MMFSL) has signed an agreement with Maruti Udyog which could drive the Indian carmaker's deeper thrust into rural India. Jagdish Khattar, managing director, MUL reiterated his belief that a lack of focus on first-hand buyers is where the industry has gone wrong. "We have the cars, and MMFSL has the funds for these cars. This was a partnership waiting to happen," he said.

Ramesh Iyer, managing director of MMFSL, told Autocar Professional: "We already financed close to 3,000 Maruti vehicles before this tie-up happened. (But) It will definitely bring good numbers to our balance sheet; and we will probably get a little more exposed to the Maruti strategy."

Over the last five years, MMFSL has been adding 50-60 branches a year, totalling 306 last year. The finance company expects growth to be steady, but it will go much deeper in rural areas of India. MMFSL would cover about 60-70 percent of Maruti dealerships in rural areas. "I don't want to give a target. But I want Maruti to say one day that MMFSL made a difference to its market share," said Iyer.

MMFSL has 500,000 customers in its database which will add value to Maruti dealers . Quick to dismiss competition between MMFSL and Maruti's other finance companies, he added, "I am a believer that customers will decide what they want to buy."

MMFSL will use the dealer network of MUL and its service mart Maruti Finance to market its automotive loans. Mahindra vehicles are doing well in the Middle-East and Africa. Therefore, going overseas for MMFSL is part of the company's plan. "South Africa could be an opportunity. But I personally think we would look at Asian markets like Sri Lanka or Bangladesh," said Iyer.