INSUBCONTINENT EXCLUSIVE:
Mumbai: Disbursements by nonbanking finance companies (NBFCs) to the auto sector have been affected as sales of new vehicles have declined
sharply, analysts said.
Growth momentum has slowed and a revival in the sector is uncertain, they said
funds amid a liquidity squeeze for the sector that was sparked by the default by Infrastructure Leasing Financial Services (ILFS)
Financiers have tightened screening of borrowers and are going slow on the relatively higher risk segments.
At Magma Fincorp, disbursements
for utility vehicles (UV) and cars fell 5 per cent to ?1,548 crore in FY19
Banerjee, CEO, asset-backed finance business, Magma Fincorp.
Mahindra Finance has sought to buck the trend by focusing on used cars and
employing a customised approach, given its focus on rural markets and a squeeze in the UV segment
The estimated value of assets financed on a standalone basis has risen 22 per cent to ?46,210 crore in FY19 from ?37,773 crore in the year
Surely, extra caution would be exercised to better understand the customer needs and capabilities
We work mostly with earn-and-pay customers and hence believe in not looking at just the current scenario but forecast midterm
per cent in April after growing at 8 per cent in FY18 and 2.5 per cent in FY19
According to the Society of Indian Automobile Manufacturers (SIAM), this is the 10th consecutive month since July 2018 that car sales have
Almost all carmakers are facing a crunch, forcing them to make production cuts
Twowheeler makers such as Hero Motocorp and Honda Motorcycle Scooter India are also planning similar production cuts in the quarter.
Growth
in most auto segments, especially cars, two wheelers, CVs and tractors, was tepid toward the end of FY19
The moderation was largely attributed to weak demand, the rising cost of vehicle ownership, tighter liquidity, selective funding and higher
insurance costs, said an Edelweiss report
asking for longer tenors or repayment extensions in some segments due to temporary cashflow issues, said the report.
In the first-half of
the current fiscal, auto sales across categories are expected to be soft
Sustained liquidity tightness, uncertainty over the monsoon and a higher base in the first-half are among the key reasons
For the second-half, while the street is anticipating volume recovery led by BS VI pre-buying and liquidity easing, analysts said transition
to the new emission norm will not have a significant role to play.
With a new government in place and stability being a critical element,
NBFCs are cautiously optimistic about a revival in growth
Shriram Transport Finance.
Branch expansions and a multiproduct approach should be able to balance growth for the NBFCs