Mahindra Finance upbeat as vehicle sales rebound

Ramesh Iyer, Vice-Chairman and Managing Director of Mahindra Finance, tells Murali Gopalan that rural India is beginning to fire on all cylinders as the businesses of used cars and two-wheelers are changing.

- Murali Gopalan

RURAL FINANCE CHALLENGES

• Consumers are mostly in wait and watch mode.
• Buyer confidence will take time to reach preCovid levels.
• There's a mismatch in supply and demand for new and used vehicles.
• Earn-and-pay segment will see earnings improve in the next two years.
• Volatility in fuel prices as well as rising interest costs could have economic ramifications.

With buoyancy back in vehicle sales, Ramesh Iyer is confident enough to state that the future looks bright for his company. Yet, the Vice-Chairman and Managing Director of Mahindra Finance still sounds out a note of caution. “Has it gone back to the pre-Covid levels? I may still be hesitant stating this even though almost every segment that was suffering then is back to action,” he says.

Why then is Iyer being circumspect? Simply because even while the momentum is in place, it is still not in “full swing” especially key segments like cab operators for instance. “Tourism has picked up but is everyone travelling? Crowd levels are high but I think people are still a little hesitant and would rather wait a little more before they take off on a holiday,” he elaborates.

Beyond this, the fact remains that there is still a waiting list for new and used cars and had this not been the case, Mahindra Finance’s disbursements would have been much higher. People are not exchanging their old vehicles since they are not getting new ones. “We have seen this in the past that when demand starts to pick up, collection improves and that is a reflection of the cash flow in the market,” explains Iyer.