Mahindra Finance to offer cars on subscription, targets Rs 10K crore book size in five years

The company plans to leverage its experience in vehicle financing and its expertise in estimating the residual value of cars to give it an edge over existing players in the market like Revv, Zoomcar, Orix and Myles. It expects to build a book of Rs 10,000 crore under Quiklyz over the next 3-5 years.

The cars will be registered in the customers’ name and come with white number plates and no speed-limiters, unlike other subscription products in the market, said Ramesh Iyer, Managing Director, Mahindra Finance. The company expects this to be a key differentiating factor for itself.

Customers pay a monthly fee that includes everything from vehicle instalments to insurance to maintenance. They have to pay zero down-payment under this model unlike when buying a new car directly, which requires a down-payment anywhere between 10-30% of the price of the vehicle.

“We think that this is definitely going to be the future. We believe that this is a very large opportunity that we are going to miss,” Iyer said.

The vehicle subscription market is yet to take off in India. Several companies have attempted at cracking this model over the past few years. Some have even provided the option to owners of sub-leasing their cars for short-term rentals when not using it to bring down their monthly payments.

However, the model accounts for less than 1% of new car sales in India by Mahindra Finance’s own estimate.

Iyer said that the model was only now being considered by customers as a viable option to buying a car. Other similar products in the market may have been “premature,” he said.

The target clientele for the car subscription program are mobile professionals who may not want to go through the hassle of buying, maintaining and re-selling a car and would rather have a third-party handle it. It will also cater to corporate clients and vehicle fleet operators.

It also plans to break into the urban lending market with this product, having focussed extensively on the rural markets so far. It will begin operations in six cities – Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune – before expanding to the top 30 cities.

The company is also mulling to enter used vehicle leasing and commercial vehicle and construction equipment leasing business in the future.