Mahindra Finance is looking at a big play in digital and leasing of electric vehicles (EVs) as part of its growth blueprint.
“For a model like ours which is rural-focused, one of the big opportunities is digital for people to pay their instalments. If the customer is confident that money is going into the right hands, he will participate actively in buying and repayment of loans,” Ramesh Iyer, Vice-President and Managing Director, told Autocar Professional.
There is now a digital finance company within Mahindra Finance (Digital Finco), a complete paperless operation for the humongous customer and guarantor base. With 10 million already in place, this number can grow into more customers rapidly given the potential of the business. The company can offer them a variety of small ticket loans in two-wheelers, consumer durables and even personal/home loans.
“This is an area where we were not present in and clearly an opportunity to build digitally,” said Iyer. This business has the potential to grow to Rs 20,000 crore in three years. The annual disbursements will be very high and the initiative can generate huge profits if everything goes according to plan.
There are also plans to finance the growing electric mobility boom but from a different route. “I look at electric in two ways: this is a finance company from an OEM and M&M by itself is very actively engaged in electric. We will have a natural advantage to work with them as a partner,” he elaborated.
This will give Mahindra Finance an entry into urban centres which is largely uncharted territory thus far. According to Iyer, EVs will see more bulk/institutional buying.
“I also think that EVs will open an opportunity for leasing. The success of a leasing programme is going to be the ability to assess residual value,” he said.
Hence, the obvious advantages of having a company like First Choice Wheels within the ecosystem as well as a strong OEM relationship and financial capability will “give us the opening for leasing” and an entry into urban India.
A leasing vertical has already been set up within Mahindra Finance with business carried out for some vehicles in Bengaluru and Delhi. “We are clearly in this business and EVs will be the best bet for this leasing model and our entry into urban India,” said Iyer.
While two-wheelers in rural India will get a boost from the digital foray, bicycles may also offer an interesting opportunity to help people earn more. Even if a person in a village is able to cycle to a neighbouring town, his income levels will increase.
“I believe that bicycle buyers are not defaulters. They may not be able to invest Rs 2,000 for a bicycle and it is necessary to design a programme for them,” said Iyer.
It is, of course, a different ballgame in big cities where people are buying pricier bicycles for health reasons but their counterparts in villages need this form of mobility to increase their household incomes. This is where easy access to loans will make a big difference.