Two-wheeler makers to get into finance biz.

After ICICI bank decision not to provide two-wheeler loan facility through its dealer network as part of its efforts to cut down expenses, the two-wheelers manufacturers are gearing up to enter the finance business by either expanding their non-banking finance arms or through tie-ups with local financers.

However the ICICI bank said that it will be providing two wheeler loans at its branches.

Two of India’s largest two-wheeler manufacturers TVS Motor and Bajaj Auto, have almost finalized the alternate arrangements to finance their businesses. “This would mean better service for customers,” said S Sridhar, CEO, two-wheelers, Bajaj Auto. “However, we would ensure that the customers’ credit history is properly scrutinized”.

However both the companies have expanded their domestic finance arms, TVS is trying for outsourcing finance to local financers to fill in the gaps at its showrooms across the country. The company is having talks with up to six local financers in various regions as well its own finance arm, TVS Finance.

HS Goindi, head of sales, service and marketing, TVS Motor pointed out, “The question is not of credit, it is of the need for two-wheelers in India, and we are working out a strategy to fill the need”. “Since local financers have better local knowledge, they will be able to figure out a way to ensure credit quality.”

Bajaj Auto Finance Ltd, the finance arm of the Bajaj Group, has decided to enter the two-wheeler finance market.

“Mercedes Benz, Audi are among some companies abroad who have been very successful in finance businesses. We feel this is an opportunity,” said Sridhar.

Sridhar informed BAFL is on the expansion mode since last six months.

Companies do agree that ICICI Bank’s pullout is going to hurt two-wheeler makers, they also said that the quality of credit is not necessarily a killer. “There is a huge need for two-wheelers in the Indian market, and we have seen growth at TVS in the last two months,” said Goindi.