Daimler hopes to grow business to 1.2 mln euros by year-end

Chennai: Daimler Financial Services India (DFSI) expects to grow assets under management to 1.2 million euros in 2016 with an additional 200 million euros business target this year. The non-banking finance company (NBFC) is also looking at tapping the bond market for further funding.
"The Reserve Bank of India (RBI) easing of interest rates, has led to banks' lowering interest rates. But the lower cost of funding has not really been passed onto us.We will be looking at market borrowings near-term," said Fred Weick, managing director, Daimler Financial Services India.
DFSI, which made an initial investment of 44.78 million euros to set up operations in India said its equity investment has gone up four times in the interim. "Our investment's gone up to 182 million euros from about 45 million euros. That in itself is an adequate indicator of our growth story," said Weick.
Its customer profile has also changed. While the average age of its customers globally is 45, in India the average is much less at 37. "We have a lot of young corporate executives, who are looking at value for money and Mercedes Benz embodies - the passion, drive and performance they are looking for. Earlier, our customers were 40 plus and had to have a huge bank balance," said Weick, adding that "today, the criteria is not so much one's bank balance as one's affordability. We are looking at monthly cash flows and our cars are now seeing a much younger clientele from a decade ago."
Till date, total live contracts financed by DFSI exceeds 28,000 auto loans, with more than 99% loans being captive loans for Daimler and Benz products. "Even in the trucking segment, we've seen a shift in dynamic. Earlier, truck operators wanted to own larger fleets. But today, cost is also a deciding factor. Fleet managers are looking at how much it costs them per kilometre for shipments and here Benz stands to gain," said Weick.
Another improvement has been from financing one in five Daimler cars or trucks, DFSI today finances one in two Daimler vehicles sold. "Our loan products are also flexible in nature and take into account the seasonality of the business. If we know that during monsoon seasons, truck operators take a hit in revenue, then we model their EMIs such that they don't have to pay as much during the lean months," said Weick. Daimler offers different solutions like star finance, star agility, star lease, star insurance, dealer real estate financing, gap insurance, and structured financing.
With BharatBenz Insurance, customers can now have zero-depreciation and full protection for engines, paint and glasswork. "With the impact of the Chennai floods, customers became more aware as to the need for a comprehensive insurance package. An engine is the most expensive part of a car and it can turn out a dud in a worst-case scenario with no insurance cover. A majority of our customers want premium coverage as they are paying for a premium product," said a Daimler executive. Daimler's insurance partners, include Bajaj Allianz General Insurance Co and Reliance General Insurance Co.