Low base to accelerate FOCs growth in FY22

NEW DELHI, FEB 13 (IANS) | Publish Date: 2/13/2021 1:05:09 PM IST

Luxury car segment financiers - Foreign passenger vehicle NBFC Captives (FOC) - are likely to see a pick-up in growth next fiscal due to low base, said ICRA. The segment plays vital sales boosting financing role for the luxury car industry by offering low-cost credit and innovative credit models. It also plays an important role in inventory and long-term financing for dealerships, which supports the dealers’ financial flexibility owing to the relatively low sales volume of foreign OEMs in India.

According to ICRA, the slowdown in PV segment along with Covid-induced disruption led FOCs credit contraction by 8 per cent year-on-year in FY20 which further dipped by 4 per cent YTD in H1 FY21. Besides, ICRA estimates showed that FOCs accounted for around 22 per cent of NBFC PV credit as on Sep 30, 2020.

The relatively higher contraction in luxury car volumes compared to overall PV sales, the share of FOCs declined to 22 per cent of NBFC PV credit as on September 30, 2020 from 25 per cent as on March 31, 2019. “The challenging macroeconomic environment...led to a contraction in FOC credit in FY2020 and H1FY2021,” said Manushree Saggar, Vice President and Head - Financial Sector Ratings, ICRA.



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