Volvo Financial Services has entered India, and will fund Volvo commercial vehicle and off-highway equipment buyers.

Volvo entered India in 1996, and set up a plant on the outskirts of Bangalore to produce modern trucks. Over the years, the Swedish company also invested in the manufacture and sale of buses, off-highway equipment, generators, etc. To fund the purchase, the company inked an alliance with financial institutions like SREI PNB Paribas. Finding an opportunity, the Swedish Group’s own financing arm, Volvo Financial Services, has entered India. The entry of Volvo’s financial arm is expected to strengthen Volvo Group’s ability to provide a competitive solution. It is also expected to be a one-stop shop for its CV and equipment buyers. The offerings will pertain to equipment, loans, leases, insurance maintenance and other aftermarket services to buyers of Volvo and Volvo Eicher products. Said Scott Rafkin, EVP and Global President, Volvo Financial Services, “We have a strong understanding of the use of the products made by Volvo Group and VE Commercial Vehicles under the Eicher brand. We want to be the best captive (finance provider) in the market, and a provider of choice so that the clients continue to do business with Volvo. For us, people make all the difference.” A business vertical under Volvo AB, Sweden, Volvo Financial Services is present in 44 markets across three regions. Established in 2001, and headquartered at Greensboro in North Carolina, USA, Volvo Financial Services recorded a retail volume of USD 1.8 billion in the second quarter of 2015. It enjoys a gross order portfolio of SEK 125 billion. Fourth largest equipment captive based in USA, the company, in India will offer its solutions under Eicher Financial and Volvo Financal service heads.

Stating that they have had a good co-operation, and an alliance that was mutually beneficial until it came to a natural conclusion, Rafkin associated the entry of his company into India with market opportunity. “We felt it was the right time to enter India. The 44 markets that we are present in, Volvo sells 90 per cent of its products approximately. This amounts to a competitive footprint,” he mentioned. Claiming to offer a value proposition and a competitive advantage in the form of customised financial solutions, expertise, and knowledge of the customer’s business as well as the products, the company will invest over USD 50 million stipulated by the Reserve Bank of India in case of a foreign NFBC venture. Rafkin averred, that they see a robust growth path (in India). Stating that the same may be exciting, and even though it is not the force behind their drive into India, Rafkin said, “We are here for the long-term and the investments we are doing here are for 20-25 years, overseeing multiple business cycles.” Expressing his excitement about the (Indian) economy showing more robust growth, Rafkin drew attention to the fact that the Indian market offers a scale because of the Volvo footprint. Volvo Group sold 36000 units in 2014 in India. Claiming to have an objective to be the No. 1 provider of financial services for each of the (Volvo Group) brands, the ride to good times claimed company sources, will hinge on the Group deliveries. India, they said, is poised to be the top market in the next five years for Volvo Financial Services.

According to Santosh Iyer, Managing Director, Volvo Financial Services India, the entry of Volvo Financial Services endorses Volvo Group’s commitment to India. “Whether our customers are large fleet operators or small business owners, they are at the core of everything that we do. We work closely with our construction equipment, truck and bus division colleagues to understand the business needs and deliver solutions efficiently,” he said. According to Rafkin, sophistication in the financial markets is growing. Customers are looking at total solutions; they are looking at total cost of ownership type products and services. “We therefore are looking at not just a financial product but also service and maintenance offerings, and insurance offerings. It could also be telematics and driver training. We try to package them such that it will make doing business with the Volvo Group easy,” expressed Rafkin. Stressing upon the key attributes, ease of doing business, speed to market, long term relationship and knowledge and expertise, Santosh remarked that a truck, bus and construction equipment may look different, their maintenance needs are similar, even identical, and would entail the services of a dealer since the equipment is expensive. He mentioned that the needs in case of (Eicher) light-duty trucks may differ, but that of the heavy-duty trucks and equipment are turning out to be quite similar. “We would look at bundling maintenance even though it may call for detailed evaluation on a case-to-case basis,” he mentioned.

Employing a strategy to offer solutions to Volvo and Eicher product buyers under respective financing heads, Rafkin explained that they carry out this practice across the globe, and in case of every Volvo Group brand. Refering to the off-highway equipment and engine or genset (Volvo Penta) buyers, Rafkin opined that they would support them in the best possible manner. Agreeing that leasing is not popular in India, Santosh remarked that they have it as a product offering and in the wake of the fact that India is a dominant loan market. He mentioned further, that they are looking at a bundled loan product rather than a leasing model. Looking at dealer financing from a point of view where the market dynamics are changing to a ‘stock and sale’ model, Volvo Financial Services is keen to understand the business cycle of the client and tailor the finance offering up front. Terming the funding offered by banking institutions as opportunity based, Rafkin expressed that their offerings are engineered by taking into account the cyclic nature of the market. They are thus tailored to support the clients through the dealers by understanding their business model and cash flow such that they are capable of providing a support throughout the complete business cycle. Terming Volvo financial Services as a premium financing institution, Rafkin said that their offerings would be competitive. They will not be about offering the lowest rates but about delivering a premium experience, and would be supported by the latest development in the area of technology.