Daimler's financial services arm rides on Mercedes sales, and vice versa

Every second car sold in India is now financed by this arm, whose transactions grew 25% in 2016

Mercedes-Benz Financial, the vehicle financing arm of German luxury car maker Daimler, is expanding the business on the growing popularity of its parent’s luxury car business in India. Mercedes emerged as the country’s biggest luxury car player in 2015 and retained the position in calendar year 2016. 

Every second vehicle sold by Mercedes in the country (on lease/finance) is now financed by Mercedes-Benz Financial or MBF. The car maker said MBF saw a growth of 25 per cent in its transactions during calendar year 2016. “MBS is growing favourably with our rising presence. They started just five years ago and have grown rapidly. They have introduced new concepts in financing and offers high degree of flexibility to buyers. It has helped us in regaining more customers. The company can make money on sale of vehicles and also on financing them,” said Roland Folger, managing director and chief executive officer at Mercedes Benz. 

In 2015, Mercedes posted a 32 per cent growth in volumes and sold a record 13,502 vehicles in India to become largest player overtaking German brand Audi. The company’s volume declined marginally to 13,231 vehicles in 2016 due to diesel ban in national capital region and demonetisation but it remained the largest player. MBF does not finance vehicles from the competition.

The financial services business of Daimler is also growing on the back of its commercial vehicle business in the country under the Bharat Benz brand. Bharat Benz does not share the volumes it sells but Bharat Benz Financial finances every second CV sold by the company. 

Other than vehicle financing, Daimler also offers insurance service for these vehicles, bringing another income stream for its parent. The company said every two out of three luxury vehicles sold was protected with Mercedes-Benz Insurance. In case of CVs, two out of every five units sold were protected with an in-house insurance product. 

Daimler Financial Services India (DFSI) has played a key role in the growth of both passenger and CV business of Daimler in India and it aims to be the first-choice provider of financial and mobility services for customers and dealers, the company said. It added that total live contracts financed by DFSI are 30,000 + auto loans in a period of just five years. Daimler Financial Services’ global portfolio volume is more than EURO 125 billion as of November 2016.