Truck financier Shriram Transport enters used-car space

Used-truck financier Shriram Transport Finance (STF) today said it has entered the pre- owned car segment through its 'auto malls'.
"We were financing passenger vehicles under our commercial vehicles business, but now we have started doing passenger cars exclusively, wherein an individual can buy or sell using our auto malls," STF Managing Director and Chief Executive Umesh Revankar told PTI.
The business kicked-off about six months back and STF is clocking Rs 50-crore turnover a month, which it aims to ramp up to Rs 100 crore by September, he said, adding at present the average ticket size per transaction was around Rs 2 lakh.

However, he clarified that entering the used car space had nothing to do with the slump in the truck business due to economic woes and called it an expansion of overall business.
The mall will act as a catalyst for bringing together the buyer and the seller, Revankar said, adding once the deal is sealed, the company will help the buyer with financing.
STF is primarily looking at institutional sellers like manufacturers/dealers, banks who have taken possession of the car for non-payment of loan by a borrower and fleet owners. Buyers largely consist of individuals buying their first car.

Manufacturers like Maruti, M&M and Hyundai already have a presence in the used-car selling space, while there are other dedicated chains and online portals as well.

Revankar, however, said unlike the fixed prices for vehicles, the malls have a system of buyers bidding at a pre- determined time after checking the vehicle. "We offer full transparency and genuine price discovery," he said, adding the company is also tying up with many existing sellers.
Additionally, the company is also partnering with car makers for a deeper penetration.
"Car dealers offer a 'buyback' when someone is upgrading car. They can come to the mall to sell the used car at any time. Our idea is to tie-up with the manufacturers so that their dealers can associate with us," Revankar said.

He said the company has already tied up with one car manufacturer and was in talks with some others. He did not name the manufacturer.
In FY'13, the company earned a post-tax profit of Rs 13 crore from the auto mall vertical, which Revankar said will be flat in FY'14 but rise considerably in FY'15.
STF is planning to double the number of auto malls to 60 by March 2016 from the current 31, he added.