After a long-time connection with the private sector financers, India's largest passenger car maker, Maruti Suzuki is now persuading the public sector banks to ease the availability of auto finance.
The move comes at a time when the auto industry is facing a sales crash due to the reluctance in lending by private lenders. Officials from Maruti Suzuki said that now they have intensive plans to promote PSU banks finance schemes. Although the company has not taken decision to detach its association with private banks like HDFC Bank, ICICI Bank, Axis, Kotak Mahindra and non-banking finance companies like Sundaram, Magma, Chola Mandalam, Mahindra, Reliance, Sriram.
The automaker had entered into a tie-up with the largest lender, SBI and its seven associate banks a year ago. Since then it has also had association with PNB, United Bank of India (UBI) and Bank of Maharashtra.
At this time it is noticed that the companies financing Maruti Suzuki cars are mainly PSU banks. Now these banks are extending auto loans to around 60% customers as compared to 50%, two months ago. This change has been marked due to the reduced exposure of the private banks to car finance. Also these private lenders have raised the margin money amount that has prompted customers towards the public lenders.
The liquidity crisis in the economy has impelled the private sector banks to hold back on their auto loan portfolio. ICICI bank that financed around 13% of Maruti Suzuki cars sold till two months back now finances only 5% cars. Similarly HDFC's exposure has also reduced to 5% from 9% earlier. In fact NBFCs like Mahindra have stopped financing Maruti Suzuki cars.
As a result of this, private banks are also anticipating a much lower growth in their auto loans portfolio against the public banks. Besides they are also charging higher car loan interest rate against the PSU banks which has been the main factor for a fall in their auto loan segment.
Recently Maruti has launched its new model, A-Star that has failed to lift the spirit of investors.