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Car loans rise 18 per cent to Rs 33,000 crore in 2009-10

By Motortrend India Staff   |   20 April,2010

Leading banks lent 18 per cent more to car buyers in 2009-10 at Rs 33,000 crore, compared with Rs 28,000 crore in the previous year.

HDFC Bank, one of the leading lenders for passenger cars, registered 45 per cent growth in this segment at Rs 11,000 crore, accounting for one-third share of the market.

Kotak Mahindra Prime disbursed 90 per cent more at Rs 4,200 crore, compared with Rs 2,200 crore in 2008-09, while Axis Bank’s disbursements went up by 40 per cent to hit Rs 2,000 crore. ICICI Bank and State Bank of India declined to give out their figures.

The spurt in loans came on the back of a 25.6 per cent jump in passenger vehicle sales in 2009-10 at 19,49,776 units, compared with 15,52,703 units in 2008-09. This growth was mainly due to lower interest rates and excise duty against the previous year.

As part of its stimulus package, the Centre had reduced the excise duty across all categories by four per cent at the beginning of 2009, resulting in lower car prices. Further, the interest rates of 10-11 per cent during 2009-10 were lower than that of 13-14 per cent in 2008-09.

“Auto loan disbursement is directly linked to the industry fortune. Last year was really upbeat for car sales and the surge in demand for passenger cars helped auto financiers like HDFC Bank and others to garner a bigger market share,” said an industry expert.

Axis Bank, which has been aggressive in the car loan market, says they have targeted larger ticket sizes. “Along with consolidating our retail asset business, we have focused more on executive, premium and luxury cars that have helped us to get a better ticket size,” Manju Srivatsa, president (retail), Axis Bank, said.

“More than a dozen new launches in the last financial year resulted in nearly 75 per cent of the total cars sold being financed against 60-65 per cent in 2008-09,” said an industry expert. “However, as new dealers are spreading across semi-urban areas, the real challenge for all these banks will be to cover the length and breadth of the country.”

Source: Business Standard

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