Mahindra Links Up With Finance Firms To Boost Sales

Mahindra & Mahindra, the utility vehicles major, is entering into strategic alliances with three finance companies for financing its vehicles. The company is entering into agreements with Ashok Leyland Finance (ALFL) for boosting sales in the country's western region, with Shriram Transport and ALFL for the southern zone and with Motor General Finance India for the north.

Besides, M&M's in-house financing company, Mahindra & Mahindra Finance Company (MMFCL), will be provided with access to additional funds to supplement aggressive sales efforts of the company.

It has decided to step up sales in 1997-98 as it is expecting a spurt in the demand for utility vehicles during the year. According to the company, the legalisation of utility vehicles as rural taxis is expected to take up the demand for its vehicles considerably.

 

Besides, the company is expecting a downtrend in heavy commercial vehicles sales in this period which would, in turn, attract more finance companies towards the utility vehicles segment.

"The low rate of default in case of M&M utility vehicles, too, is expected to spur the finance companies to increase financing the M&M vehicles," a source at M&M said. The default rate at M&M is less than 0.5 per cent while it is 4-5 per cent in case of HCVs and 10-15 per cent in case of LCVs. The automotive division of M&M produced 65,365 vehicles in 1995-96, excluding completely knocked down (CKD) kits against 47,638 vehicles of the previous year registering a growth of 37.2 per cent. Sales, too, grew 29.5 per cent to 63,583 units against 49,108 units in the previous year.

However, M&M was able to maintain its 57 per cent market share in 199-96, thanks to the growth in Tata Sumo sales. Telco sold 42,000 Sumos in 1996-97 compared with 69,000 utility vehicles sold by M&M.

However, the company has lined up plans to strengthen its base and modernise its vehicles besides broadening of dealership network. The company is planning to launch a few new products during the course of the year, too.

In 1995-96 the company launched 3 new products, a new LCV, a sporty four-wheel drive the Mahindra Classic, and a new five-door hard top Commander.