Date:20/08/2008 URL: http://www.thehindubusinessline.com/2008/08/20/stories/2008082052030200.htm

Back Mahindra Finance to fuel rural ride of GM, Hyundai

Manu P. Toms

Mumbai, Aug. 19 Mahindra Finance, the vehicle finance arm of Mahindra Group, has got into an understanding with car makers General Motors and Hyundai to provide finance for their vehicles in the rural and semi-urban markets.

This coincides with the automakers’ plans to strengthen their presence in the rural markets where Mahindra Finance has a fairly large network.

General Motors has been streamlining its strategy to crack the rural market with its small car Chevrolet Spark. Apart from its plans to work with local administrative bodies to offer attractive packages to buyers, it tied up with Mahindra Finance. Likewise, Hyundai recently launched a few marketing initiatives to tap the rural market.

“Both these players didn’t have rural focus. Now they want to operate beyond metro markets. For any automaker who wants to operate in rural market, we become an automatic choice,” Mr Ramesh Iyer, Managing Director, Mahindra Finance, told Business Line. “It will take two to three months to see how our business will improve following these tie-ups.”

“We have finalised financing for Spark. Mahindra Finance will finance the purchase of the car across the country,” said Mr Ankush Arora, Vice-President, Marketing, Sales and Service, General Motors India.

GM has tie-ups with ICICI, Magna Finance and SBI.

Mahindra Finance and General Motors India reached this understanding just ahead of the festival season as a substantial rise in business is expected during this period. GM is looking to make this tie-up useful especially during Ganapati Puja in Maharashtra and Onam in Kerala, both in the first half of September.

“Mahindra Finance has been one of our financing partners for a while. We are expanding our partnership,” said the spokesperson of Hyundai Motor India.

In spite of the tightening of credit market in the high interest rate regime, Mahindra Finance hopes its business will grow as automobile companies are focussing on small towns and villages.

Mahindra Finance has a network of 450 branches and targets to add 30 branches by the year end. The company finances the purchase of 20,000 vehicles per month, of which 65 per cent are Mahindra vehicles, including tractors.