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Consumer Automotive Financial Services in India

  • July 2014
  • -
  • Finaccord
  • -
  • 50 pages

Consumer Automotive Financial Services in India investigates the market for automotive financial services linked to sales of new and used passenger cars to individual buyers in India. In addition to analysing the market for finance and leasing services, the study also covers motor insurance, road assistance, extended warranties, creditor insurance, GAP insurance and prepaid service contracts.

Using survey results for average take-up rates for finance and leasing propositions at the point of sale, data for the size and growth of the automotive finance and leasing market for consumers in India is provided in terms of gross advances and assets leased for 2009 to 2013 with splits between finance for new and used cars and between finance organised through dealerships at the point of sale and directly with banks or other lending institutions.

Moreover, also by means of data for average take-up rates, the markets for motor insurance, road assistance, extended warranties, creditor insurance and prepaid service contracts are sized in terms of gross written premiums and other revenues sold through the automotive trade (i.e. via dealers and manufacturers) in 2013. These markets, estimated to be worth over INR 115.2 billion in total in 2013, are broken down between new and used cars, and between new contracts sold during 2013 and in-force business sold in previous years but still being renewed in 2013.

The report draws on a survey of 80 leading car dealerships as well as an analysis of the approach to consumer automotive financial services of 29 car manufacturer brands in India. The PartnerBASE™ dataset that accompanies the report details each of the marketing initiatives for consumer automotive financial services traced by Finaccord for both dealers and manufacturers; a market data annexe is also available in a convenient spreadsheet format so that there is no need to re-enter key data points from the report.

In addition to captive finance companies owned by manufacturer brands, organisations covered by the report include Allianz Global Assistance, Bajaj Allianz, HDFC Bank, ICICI Bank, ICICI Lombard, India Assistance, Kotak Mahindra, MyTVS, New India Assurance and State Bank of India. Together, the report and database will provide you with the definitive guide to current and future opportunities in consumer automotive financial services in India.

Table Of Contents

Consumer Automotive Financial Services in India
Table of Contents

Executive Summary

Introduction

Market Analysis

List of Graphics / Tables

0.0 EXECUTIVE SUMMARY

1.0 INTRODUCTION

What is this report about?

The focus of the report is on financial services related to the sale of passenger cars to individuals

Rationale

The provision of financial services is essential to support both car sales and profitability

This report offers a detailed updated analysis of the subject in India based on primary research

Methodology

Survey of dealers and manufacturers

Market data

Computation of market data is based on a complex set of assumptions and variables…

…in order to provide market segmentations in unrivalled detail

External sources

Definitions

Finance and leasing products

Insurance, warranty and assistance products

Operating models

Tied and non-tied providers

Abbreviations

Exchange rate

PartnerBASE and market data annexe

Finaccord

2.0 MARKET ANALYSIS

Introduction

Passenger vehicle data

Sales of new cars in India have exceeded 2.5 million for the past four years...

...but the growth of used car sales has been both more rapid and more consistent

Maruti Suzuki occupies a dominant position in the market for new passenger vehicles

Consumer automotive finance and leasing market

Market size and growth

Point-of-sale finance for new cars dominates the automotive finance market...

... and has grown quite rapidly since 2009 as a result of increased sales and inflation

Types of finance and leasing product

The Indian point-of-sale finance market is dominated by simple loans

Consumer automotive insurance, warranty and assistance markets

Market sizes

In total, the automotive trade is likely to have sold contracts worth well over INR 100 billion in 2013

Survey of automotive dealers and manufacturer brands - overview

Introduction

Provision of consumer automotive financial services

Dealers largely concentrate on four core automotive financial services

Some additional manufacturer brands could introduce finance and leasing services

Number and nature of dealer schemes

Dealers typically work with about four tied and four non-tied finance and leasing providers

Types of creditor insurance policy sold by dealers

Creditor insurance sold with cars covers death and permanent disability only

Types of motor insurance policy sold by dealers

Dealers only market comprehensive insurance policies

Sources of road assistance distributed by dealers

Road assistance is rarely bundled with products other than factory and extended warranties

Consumer uptake of automotive financial services through dealers

Around nine out of ten buyers of new cars in India acquire motor insurance at the point of sale

Take-up rates are also significant for both creditor insurance and extended warranties

Survey of automotive dealers and manufacturer brands - partnerships

Introduction

Finance and leasing In a highly fragmented market, only one finance provider claims more than 10% of non-tied partnerships...

...with 40 competitors sharing the rest of these partnerships between them

Kotak Mahindra Prime generated a pre-tax profit of INR 7.52 billion for the year ending March 2014

Toyota Financial Services India is the leading captive, ahead of Mahindra and Mahindra Financial Services...

...while HDFC Bank, ICICI Bank and State Bank of India are the leading external partners

On a combined analysis, HDFC Bank claims the highest implied share of new business...

...but with less than 10% of the weighted share of new registrations

Creditor insurance

Captive finance providers rarely offer this, leaving Max Life as the only insurer with a direct relationship

Motor insurance

Around two thirds of dealers use non-tied partners for motor insurance...

...of which there are nearly 20 competing underwriters

Manufacturer brands' partnerships for motor insurance are shared between 15 underwriters...

..six of which collaborate with Maruti Suzuki

A combined analysis points to ICICI Lombard and Bajaj Allianz as the leading point-of-sale providers

Extended warranties

Extended warranty provision by dealers is almost always organised through tied providers…

...and two insurers have won mandates with manufacturer brands as external providers

Road assistance

Road assistance is available in one form or another from the vast majority of car dealers in India

Allianz Global Assistance and MyTVS are likely to be the leading independent providers

Prepaid service contracts

Dealers offering prepaid service contracts are usually reliant on tied products…

...and the schemes of manufacturer brands are all reportedly run on an in-house basis




LIST OF GRAPHICS / TABLES


0.0 EXECUTIVE SUMMARY

Key market data for consumer automotive financial services in India, 2013

1.0 INTRODUCTION

2.0 MARKET ANALYSIS

Passenger car parc and new / used passenger car sales in India, 2009 to 2013

Passenger car parc and new / used passenger car sales in India, 2009 to 2013 (table)

New passenger vehicle registrations in India, segmented by manufacturer group, 2013

New and used passenger car finance market in India, segmented by distribution channel: volumes, 2009 to 2013

New and used passenger car finance market in India, segmented by distribution channel: values, 2009 to 2013

New and used passenger car finance market in India, segmented by distribution channel: values and volumes, 2009 to 2013 (table)

% split between the different types of finance and leasing contract organised at the point of sale in India, 2014

Total revenues from consumer automotive insurance, warranty, assistance and service contract markets in India, 2013

Total revenues from consumer automotive insurance, warranty assistance and service contracts in India, 2013 (table)

Comparison of the provision of each type of automotive financial service by dealers and manufacturer brands in India, 2014

Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in India, 2014 (table)

Average number of tied and non-tied schemes organised by dealers for each type of automotive financial service in India, 2014

% split between the different types of creditor insurance policy sold at the point of sale in India, 2014

% split between the different types of motor insurance policy sold at the point of sale in India, 2014

% availability of road assistance through factory warranties, annual services, extended warranties, motor insurance, prepaid service contracts and as a stand-alone product in India, 2014

% of new and used car purchasers acquiring each type of automotive financial service at the point of sale in India, 2014

Provision of finance and leasing by dealers in India, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of finance and leasing by manufacturer brands in India, 2014: provision rate, operating models and weighted provider share of partnerships

Implied market shares of new business for finance and leasing in India, 2014

Provision of creditor insurance by manufacturer brands in India, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of motor insurance by dealers in India, 2014: provision rate, product sources and provider share of non-tied partnerships

Provision of motor insurance by manufacturer brands in India, 2014: provision rate, operating models and weighted provider share of partnerships

Implied market shares of new business for motor insurance in India, 2014

Provision of extended warranties by dealers in India, 2014: provision rate and product sources

Provision of extended warranties by manufacturer brands in India, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of road assistance by dealers in India, 2014: provision rate and product sources

Provision of road assistance by manufacturer brands in India, 2014: provision rate, operating models and weighted provider share of partnerships

Provision of prepaid service contracts by dealers in India, 2014: provision rate and product sources

Provision of prepaid service contracts by manufacturer brands in India, 2014: provision rate, operating models and weighted provider share of partnerships

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