Mahindra & Mahindra Financial Services, Shriram Transport Finance Company, Sundaram Finance, Tata Motors Finance, Magma Fincorp & Hinduja Leyland Finance are top six finalist nominees at India Leadership Conclave & Indian Affairs Business Leadership Awards 2018 edition for the prestigious :India’s Most Valuable commercial vehicle finance Company 2018” Award Title

India’s Most Valuable commercial vehicle finance Company 2018 Nominees

  1. Mahindra & Mahindra Financial Services Limited
  2. Shriram Transport Finance Company Ltd
  3. Sundaram Finance Ltd
  4. Tata Motors Finance Limited
  5. Magma Fincorp Limited
  6. Hinduja Leyland Finance Limited

The Market Overview

The recent green shoots around the commercial vehicle sales in India may not live long as this could be a pre-buying because of the upcoming policy changes like the new body building norms and mandatory air conditioning for all the new buses and trucks sold.

According to the research firm ICRA, the total market size for CV in India will remain at 7.5 lakh units in FY18.Medium and Heavy Commercial Vehicle (M&HCV) is expected to grow between 1-3 per cent and Light Commercial Vehicle will grow by 7-8 per cent, while the entire CV segment is expected to grow by 5-6 per cent in FY18.

Evolving customer dynamics would require refreshed positioning and marketing-strategy with more competitors and advent of tech and digital has increased their expectations. While higher asset cost and overload restrictions – higher and fragmented pay-loads required.

The commercial vehicle segment in India is the most exposed segment to the factors involving economic and developmental activities. The commercial vehicle manufacturers were mainly focusing on profitability of the fleet owner by providing a product, which is good in terms of operating cost, chiefly by way of improving fuel efficiency.

The main reason behind the conservative projection is due to the low growth in the first half because of the low component availability as the industry transitioned from BS-III to BS-IV and demonetisation,

Even by 2020, the industry may not be able to touch the peak sales of 8 lakh units which it achieved in 2012, believed industry experts. Experts feel that these changing norms, impact of demonetization and slowing economy will limit the growth in commercial vehicle segment.

The Vehicle Finance market in India is estimated to be around INR 3 Trillion. The market is comprised of commercial vehicles, private vehicles, agricultural vehicles, and two wheelers. While Banks have been active in the organized segment, the unorganized segment remains untouched due the borrower’s limited banking habits and their inability to provide formal employment contracts, income proofs, and a lack of repayment track record with formal financing institutions. The market for used commercial vehicles is estimated to be around INR 1000 billion. Despite the opportunity, banks have stayed away from the segment due to the complexities involved – high cost of delivery, understanding of local geography and the perceived high risk in the informal sector. About 55% of this market is served by money lenders/ private financiers and 45% of this market is served by formal sources. While this market is dominated by very large NBFCs, there are a large number of small NBFCs which operate in the segment and have limited or no access to debt capital markets. The used commercial vehicle market is driven by the aspirations of driver turned owners, first time users and first time buyers and small road transporters. Typical end clients come from low income households who have limited access to formal sources of financing and whose livelihood is directly dependent on the vehicle. The long-term prospects of the sector continue to be supported by expectation of improvement in economic growth, increasing pace of investments in highway & road infrastructure and structural changes like implementation of emission & anti-overloading norms supporting the demand in favour of trucks. Increase in rural and urban disposable income is expected to support the two wheeler segment.