CHENNAI, Feb 6: Taking a cue from Telco, Ashok Leyland too has withdrawn its cheap-finance scheme. The company had launched a six per cent offer on Cargo trucks and a seven per cent offer on other models.The schemes were kicked off in mid-January. Leyland was forced to drive in such low-interest financing in response to Telco's 5 per cent flat offer announced at the beginning of the current year.
However, only a fortnight later, Leyland has pulled out these schemes, company sources said. This move too was made in response to Telco withdrawing its 5 per cent scheme with effect from January 31. Dealers of both manufacturers confirmed that "no cheap loans are available currently." "Both manufacturers have recently made a joint decision that truck-finance at such low interest is not good for the market in the long term," said industry sources.
Soaring interest rates have also "facilitated" this understanding between the truck majors as such schemes have become "extremely costly exercises" they added. Telcoand Ashok Leyland control almost the entire heavy commercial vehicle (HCV) market between them with the former's share being over 65 per cent.
"In a situation where even top banks have a PLR of 14 per cent, fleet operators were walking away with rates of 8 per cent to 11 per cent. There is no justification for this,'' industry sources argued. Telco's 5 per cent flat offer translates into a rate of 8 per cent on a diminishing balance basis. Similarly, Leyland's 6 per cent and 7 per cent offers translates to 9.6 and 11.2 per cent, respectively. During calendar 1997, both manufacturers were financing truck purchases at an average rate of 9 per cent to 10 per cent on a flat rate.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
