Loans for buying cars a rising trend

More and more Indians are purchasing cars on loans now vis à vis the pre-Covid-19 period, with finance penetration for passenger vehicles (PVs) increasing from 72-75 per cent in 2019 to 77-80 per cent in 2023, according to JATO Dynamics' data, which has been reviewed by Business Standard

- DEEPAK PATEL

"The availability of credit itself, with more banks coming in, the rise in rural sales with more NBFCs (nonbanking financial companies) participating, the rise in the share of fleet sales, the drop in interest rates, and banks coming out with tailor-made products for car buyers all have contributed to this growth," Shashank Srivastava, senior executive officer, marketing and sales, Maruti Suzuki India (MSIL), told Business Standard.

Fleet sales, which comprise car sales to companies, organisations, and government entities that own a fleet of cars, have also seen a significant increase.

"In 2019, fleet sales were less than 2 per cent of our total sales volume. Right now, their share has increased to 10-12 per cent. About 95 per cent of the cars sold as fleet sales are financed through loans. So, any percentage increase in fleet sales adds disproportionately to the financial penetration," Srivastava explained.