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Leyland Takes The Financing Route To Beat Lean Season

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BUSINESS STANDARD
Last Updated : Jul 21 2001 | 12:00 AM IST

Taking a cue from passenger car manufacturers, commercial vehicle manufacturer Ashok Leyland has decided to offer low interest rates finance schemes so as to increase marketshare.

The Chennai-based company is offering a special finance scheme at interest rates of upto eight per cent per annum over a three year period through its finance arm -- Ashok Leyland Finance and through its accredited auto finance companies.

The scheme, which is being offered at zero per cent service charge, will be available on the company's entire product range, across India.

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The down payment under the scheme is being pegged at a reasonable 10 per cent of the cost of the vehicle. The offer will be open only till the end of September. This, auto analysts feel, will help the company push sales during the current lean period. According to industry sources, following the good rains this year, demand for commercial vehicles will pick up in a couple of months.

Auto analysts also said that the subsidised finance scheme will have a bearing on Ashok Leyland's margins, though it could help the company in increasing its marketshare.

"Under such schemes, the accredited auto finance companies charge almost their usual rates of interest, of around 13-15 per cent. The difference in the rates has to be borne by auto company which is offering the finance scheme, thereby taking a hit on its bottomline," said an analyst at a local brokerage firm.

The Hinduja group flagship, which is a dominant player in the southern states, has lately been trying to capture marketshare in the north, where Tata Engineering has a stronger presence.

According to figures released by the Society of Indian automobile Manufacturers (SIAM), Ashok Leyland's sales of medium and heavy commercial vehicles during the first quarter of this fiscal remained flat at 6,382 units against 6,341 units in the corresponding period of fiscal 2000-01.

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First Published: Jul 21 2001 | 12:00 AM IST

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