Maruti Udyog steers Maruti Finance to south

Chennai: The passenger car major Maruti Udyog Ltd (MUL) has extended Maruti Finance, the companys car financing scheme, to the four southern states after witnessing encouraging signs in Mumbai.

In Mumbai, MUL has financed purchase of 6,000 cars with a total disbursement of Rs 150 crore, says MUL general manager (new business) R S Kalsi. The company will operate the scheme through a consortium of eight finance companies Citicorp Maruti, ICICI Bank, Maruti Countrywide, HDFC Bank, Standard Chartered, ABN Amro, Kotak Mahindra and Sundaram Finance.

For prospective car buyers, Maruti Finance offers cheaper finance rates cheaper than what the finance companies offer to their direct borrowers. Operated out of MULs dealer premises, Maruti Finance brings organised car purchase financing opportunities to places where it is not available. Further, this is one more vehicle for us to penetrate the market, says MUL managing director Jagdish Khattar.

In addition, customers availing loans from Maruti Finance can also go for an additional finance for the purchase of extended warranty on their cars up to four years. Vehicle buyers can also avail of finance for the payment of insurance premia and the purchase of accessories.

Maruti Finance is part of MULs new business initiatives to offer complete vehicle solutions to buyers and owners. The other new ventures are Maruti True Value, sale of second-hand Maruti cars after refurbishment, lease and fleet management for corporates, and automobile insurance.

It is not a sale at MUL
With Maruti cars no more the first choice of car buyers, the Rs 9,410-crore-turnover MUL is experiencing slow erosion of market shares. Further, some of its models like Versa though it looks cute are not moving well in the market. As a result, there is a sort of sale happening at Maruti showrooms.

In order to stem the slide, few months ago MUL reduced the prices of some models in Chennai and result was expectedly good. In north India, the Versa was sold at a sizeable discount to its list price. And a couple of days ago the company slashed the prices of its entry level car Maruti 800. The price reduction was between Rs 15,000 and Rs 18,000.

Khattar puts it as rationalisation of price structure for some models. When asked about possibilities of further price reduction on the 800cc car as the old plant is fully depreciated several times over, Khattar said: We have done the best that is possible.