Tata Motorfinance (TMF), the auto-finance division of Tata Motors, plans to tap the rural and urban markets with loans to attract customers towards the company’s dream product, the Rs 1 lakh-car. The car is slated to be launched by mid-2008.

“TMF currently has 70 branches in the country, which will be expanded to about 165 branches by the end of this year. We have targeted to set up 500 branches by 2009. The expansion is in anticipation to huge sales volumes for our Rs 1 lakh-car and mini truck Ace,” said Aubrey Rebello, chief, Tata Motorfinance.

“Most of our expansion will take place in the class B & C cities across the country,” he added.

According to industry sources, the company is planning attractive policies to offer cheaper loans to its Rs 1 lakh-car customers.

Market analysts have estimated the company to sell 300,000 units of the Rs one lakh-car, for the initial year of the launch. By 2010, one million one lakh cars are estimated to be sold in the domestic and international markets.

The overall vehicle financing done by Tata Motorfinance in the year 2005-06 was about Rs 5,500 crore, a 60 per cent increase over Rs 3,400 crore reported in the the previous year.

The company has financed 96,247 new vehicles during the year, a 43 per cent increase compared to 67,356 vehicles sold in the previous year.

Out of the total disbursements made, 75 per cent was in the rural markets.

In 2003, when Tata Motorfinance was established, about 90 per cent was financed for commercial vehicles with only 6 per cent for the passenger vehicles. Of the total financing done in 2005-06, 65 per cent were made for commercial vehicles and 22 per cent for passenger vehicles, which is a marked improvement.

“The proportion of disbursements for small cars will grow at a significant proportion in future,” said Rebello. This will be taking into account, disbursements for the Rs one lakh car.

Ace, the one tonne mini truck launched in mid-2005, has been a success. Huge customer response for the product has forced the company to double the capacity at its Pune facility to 60,000. Tata Motors is also learnt to be setting up a 2,25,000-unit facility in Uttaranchal by mid-2007 to meet future demand.

The unique aspect about Tata Motorfinance is that the company only finances the products of Tata Motors unlike other auto-finance companies like Mahindra & Mahindra Financial Services (MMFSL) or Sundaram Finance.

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