Daimler Financial Services India (DFSI), a division of Daimler AG, entered the Indian market in 2011 as a captive finance company, supporting financing and insurance of Daimler vehicles in the country. Within less than three years of commencement of operations, the company has its presence enlarged through two of its brands, namely, Mercedes Benz Financial for cars which commenced its operations in July 2011, and BharatBenz Financial for trucks which started functioning in May 2012. We spoke to Mr. Sidhartha Nair, DFSI Managing Director, to find out more about the company’s progress thus far and its plans for the future.
Says Mr. Nair: “Daimler Financial Services is the leading financier of its parent company Daimler worldwide. Since trucks play a vital part in the Indian economy, Daimler’s commitment to India in this field is significant, making DFSI’s role very crucial. Our business model has been well accepted by our dealers and customers, thus facilitating our penetration into the market. Our customers see a lot of value in terms of business relationship, ease of doing business, customer service, etc., and partner us for the long term.”
The company’s growth is well reflected in the impressive value proposition the captive business model has brought to the market. DFSI closed 2013 with a book value of approximately Rs. 2,000 crores (for both cars and trucks), nearly three times the figure for the previous year which stood at around Rs. 700 crores. The exponential growth in book value highlights the customer satisfaction the company has managed to achieve in a very short span of time. “Over 20 to 25 per cent of our business has come from repeat orders. We take feedback of our customers very seriously because that’s the only true recognition we can get. If they are happy with our services, then we are probably heading in the right direction, and we know that they will come back to us for sure. This is what distinguishes us from others”, he adds.
Many of its customers, including small and large fleet owners, have renewed their ties with DFSI, thanks to its comprehensive insurance protection scheme with zero debt coverage offered along with a whole lot of downstream benefits.
Focus on the long term
DFSI has been rated as one of the best financiers by truck and car dealers due to the consistency with which it operates even during challenging times. It is indeed the leading financier for Daimler trucks and Mercedes Benz cars in the country with over 25 per cent penetration in the car segment and over 30 per cent in trucks. According to a survey conducted by Nielson on DFSI’s car financing, with inputs from several dealers and customers, the company has been rated at least 30 points above its nearest competitors, most of whom are well-entrenched players in the country’s vehicle finance space.
Answering a question as to how DFSI distinguished itself from others, Mr. Nair observes: “We come into the picture even before the vehicle is sold. DFSI is part of the TCO (total cost of ownership) of the vehicle. Our sales personnel are well trained in the company’s workshops and thus have knowledge of both captive financing and the vehicles that are sold. This helps them add a lot of value while interacting with the end customer. We have our staff in each of the over 60 operational BharatBenz dealership locations and in over 50 Mercedes Benz dealer outlets across the country to explain our vehicle ownership solutions to the customers and support them in completing a seamless transaction. Over 90% of the inventory at the dealerships is funded by DFSI.”
As indicated in Daimler’s global strategy, the German powerhouse has set its sights on becoming the world leader in cars, trucks, buses and vans by the end of 2020. In India, the Daimler chapter has just begun with Mercedes Benz doing quite well in the luxury car segment and BharatBenz emerging the strongest of the recent new entrants in the trucking segment.
Briefing on DFSI’s future plans for the truck and bus segments, Mr. Nair states: “Though Daimler has been here for quite some time, what is going to happen in the next 15 to 20 years is amazing. At present we fund only for Mercedes-Benz buses in the country, but with Daimler being the largest bus producer in the world, we will soon be commencing our bus manufacturing under the BharatBenz brand in India. This is a market for over 3,00,000 buses annually, and a global leader like Daimler will not stay away.”
With Mercedes Benz car sales likely to witness double-digit growth in 2014, DFSI expects to double its book value to Rs. 4,000 crores by the year-end. As for financing Daimler trucks, many of DFSI’s competitors have slowly withdrawn their support due to the extremely poor market conditions. However, with Daimler’s complete range of BharatBenz trucks in the market, DFSI is confident of sustaining its share in the market by offering financing support to BharatBenz customers.
In 2011, DFSI brought the globally popular concept of operating lease to the Indian market. The company has leased over 400 of its cars to individuals and corporates and predicts that a significant chunk of high-end car ownership will move to leasing by the end of this decade.
Being a non-banking financial company with high funding costs, DFSI’s worth and market competitiveness would become increasingly evident with the passage of time. The company also plans to enter the used-truck financing business and fleet management services in India in the next couple of years.