Uber Consequence: Financiers Halt Funds; Car Sales Hit

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After the US based taxi service, Uber, was banned from operating in Delhi after the alleged rape of a female executive, other companies have taken a hit as well.

Among the companies that are severely affected are automobile companies. The industry is as it is struggling to keep up with sales in India.

Taxi operators have been a big contribution for car companies for sales because they have been helping drivers buy cars and work for them.

The next industry on the list that has been affected by the ban is the auto financial services sector.

After the authorities banned taxi drivers, it could be hard for them to pay up loans and EMIs as there will be no business for them. Most of these cars don't have permits to operate as regular city taxis as well.

In Delhi alone, more than INR 100 crore is at stake by the finance companies.

Auto finance companies like Shri Ram and Toyota Financial Services have in fact stopped financing commercial vehicles.

Umesh Revankar, the Chief Executive of Shriram Transport Finance, which has financed close to 100 vehicles for taxi operators like Olacabs and Uber said, "We will wait a while before financing loans to cabs associated such companies and let things settle. Delinquency in overall industry is about 5 per cent in commercial vehicles financing, which may go up due to nationwide bans."

A Senior Executive from Toyota Kirloskar Motor said, "We have stopped all arrangements with these operators with immediate effect. We are waiting for a clear signal from the state authorities before we revive such partnerships."

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Story first published: Friday, December 12, 2014, 10:45 [IST]
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