CALCUTTA, March 16: Telco has entered into an arrangement with four large auto-financiers and is offering them incentives and other benefits for selling Tata vehicles. The four companies are GE Capital, Citibank, Sundaram Finance and Cholamandalam Finance.Telco's deputy general manager (hire purchase) UK Goel and assistant general manager (eastern region) S Burman have discussed with hire purchase and equipment-leasing companies their strategies for boosting the sales of Tata vehicles. The non-banking finance firms were told that their priority will be to sell Tata vehicles. However, Telco would ensure that their interests are protected.
The automobiles giant is reported to have accumulated a large inventory which it wants to get rid off. The company's in-house financing arms Tata Finance and Telco Finance have already trimmed interest rates on auto loans substantially and the hire purchase and equipment-leasing sector had vehemently protested against it.
Telco has offered incentives such as easycredit facilities for purchase of Tata vehicles and discounts on credit to the four auto-financiers. It is planning similar arrangements with other auto-financiers in future.
According to industry sources, Telco's aggressive marketing policy has helped it reduce its average inventory level to 18-20 days from 60 days reported only a month back.
The hire-purchase and equipment-leasing companies were told that the Tata firms will be involved in only 25 per cent of the total financing of their vehicles and the remaining 75 per cent will be left to the NBFCs.
Smaller NBFCs, who are finding it increasingly difficult to compete with the credits and discounts offered by the Tata companies, have sought a level playing field. In the eastern region, auto-financiers prefer to finance old Telco vehicles which are disposed of by fleet owners. According to a scheme prevailing in the region, financing and sale of each old Tata vehicle leads to the sale of a new one.
Telco officials also told the NBFCs that they couldavail of the incentives offered for their vehicles. If they found it difficult to finance alone, they could even form groups or a consortium.
The NBFCs eagerness to take advantage of the incentive scheme follows the recent hike in interest rates on car loans. On an average, the finance companies have increased rates by 3 to 4 percentage points from 17 to 21 per cent. The rise has been partly prompted by the foreign banks' decision to hike auto loan rates.
Contrary to market reports, Telco officials said they have reduced vehicle production by around 4,000 units this month. In February, it produced 12,500 units against 10,000 in January. In December, it produced more than 10,000 vehicles including light, medium and heavy commercial vehicles and cars. In February, it sold over 3,000 Tata Sumos.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
