Auto financing to drive recovery of multifinance sector found in 2021: APPI

The Indonesian Financing Businesses Association (APPI) predicts the multifinance sector will begin to recover by next year, driven by automotive financing, with consumers likely to prioritize health insurance and safety in the post-pandemic era.

APPI chairman Suwandi Wiratno said on June 16 that automotive financing - the major market of most financing types in the united states - would see an upward trend in the near future as people would tend to travel by non-public vehicles for health and safety reasons.

“After this pandemic, people will be more wary of taking public transportation and can prefer to use private vehicles. This took place in Wuhan, China, where various people visited car dealers following the lockdown plan was eased, which trend you can do in other areas,” said Suwandi, who is as well the president director of multifinance organization PT Chandra Sakti Utama Leasing, discussing the bottom zero of the COVID-19 pandemic.

Financial institutions have already been damaged by the ongoing COVID-19 pandemic, as physical distancing restrictions impact business activities, leading to sluggish loan demand while raising the risk of bad loans. The multifinance sector in addition has been struck by a steep drop in automotive sales through the pandemic, which take into account around 70 percent of the country’s funding portfolio.

Info from the Indonesian Automotive Companies Association (Gaikindo) showed that domestic car sales plummeted a lot more than 95 percent year-on-12 months (yoy) to only 3,551 units in-may, a good continuation of the downward style seen since March.

The multifinance industry is only going to see 1 percent growth this season, less than the association’s original growth projection of 4 percent at the beginning of this year, APPI stated.

With consumers hard hit by the pandemic, multifinance companies have approved a proposal to restructure 3 million loans, with Rp 90 trillion (US$6.3 billion) with debt restructured by June 8, APPI data show.

President director of Adira Dinamika Multi Financing Stanley Atmadja also expected the safety considerations of consumers to translate into increased utilization of private vehicles in the future.

“We have began to observe significant demand for both innovative and employed motorcycles and autos in recent days. This should be seen as an opportunity, as there exists a industry out there for the funding industry,” explained Stanley on Tuesday. 

He added that in the years ahead, the multifinance sector would need to change to complement consumer preferences for making purchases and trying to get leases online.  

“We are currently getting ready to release our digital software which is our new way of marketing. We are developing apps, that can be reliably utilized by customers later on to create purchases and make an application for leases through our on line channel,” Stanley said.

Another multifinance company, Mandiri Tunas Finance has upgraded its cellular app MTF Go to provide an improved service on processing financing through the pandemic.

Mandiri Tunas Financing director Harjanto Tjitohardjojo said MTF Move offered various features, including financing proposal submissions, credit rating simulation and product facts, among other features.

“Gleam catalog of various automotive products from professional vehicles to passenger vehicles, and customers may also see credit rating and installment simulations for the merchandise on the app,” he said on June 16.