Toyota launches financial services arm in Singapore

Singapore

BUYERS of Toyota and Lexus cars now have another financing alternative for their car loans, with options to pay zero instalments for the first year as well as zero down payments.

Toyota Financial Services, a wholly owned subsidiary of Japanese carmaker Toyota, on Thursday launched its services in Singapore - its 39th country globally - with an initial investment of S$23 million.

It is providing financial services through its partnership with Borneo Motors Singapore, the distributor of Toyota and Lexus vehicles here.

This follows in the footsteps of other car brands with their own in-house financing arm, such as BMW, Mercedes-Benz and Porsche.

For a start, Toyota Financial Services, which will start operations in Borneo Motors' showrooms, will offer customers a promotional interest rate of 1.88 per cent for new car loans, which is among the lowest in the market, according to a quick check by The Business Times. Among the traditional car loan providers, interest rates typically hover between 2-3 per cent.

It will also offer customers a "Buy-now, Pay Later" scheme with no instalments for one year for all new Toyota and Lexus models, as well as a zero down payment lease scheme.

Vinod Cherumadathil, CEO, Toyota Financial Services Singapore, told BT that their decision to enter the Singapore market predated Covid-19, and was made with the long term in mind. This holds true even as the surprise pandemic continues to take a toll on the global economy with a slowdown in consumer spending as a consequence.

"Whenever we enter a market, we never withdraw from it, so that's our commitment to our customers," he said.

Jasmmine Wong, CEO, Inchcape (Borneo Motors' parent), Greater China and Singapore, noted that it was during the circuit-breaker period in the past few months that accelerated a change in customer behaviour.

"Now with Covid-19, everybody's more willing to try online purchases and to search for information rather than going directly to the showrooms," she said.

The distributor saw "quite a number of transactions" taking place online, which could only happen since the end-to-end infrastructure was already mostly in place, added Ms Wong.

Customers are able to browse, make the purchase online and get instant approval, now enhanced with Toyota Financial Services' financial calculator for customers to do credit checks at their convenience.

Post Covid-19, she believed that distributors will need to adapt by allowing people to transact the way they prefer, be it online or offline.

"We just have to make sure that we provide the facilities, including the financial instruments, so that people can decide how they want to purchase, and make it easier for them to own a car," she said.

The entry of Toyota Financial Services is just one other financing option for buyers of Toyota and Lexus to choose from. Car buyers have various alternatives, with some car dealers offering their own in-house financing package, or loans from financial institutions (FIs) offered by dealers where FIs have to pay a commission, as well as direct loans from FIs.

Mr Cherumadathil acknowledged that competition is "very, very strong" in Singapore, but said that there is no specific target or market share that it aims to hit.

He believes that Toyota Financial Services will be able to hold its own on the back of its financial capabilities and global experience, as well as its belief that it understands the Toyota and Lexus brands "better than anybody else in the market".

It is currently the largest auto finance company in the world with over 10,500 employees globally with an asset size of over US$213 billion.

Toyota Financial Services' track record in car loans also extends to its credit processing capabilities. In Singapore, the process utilises the national data repository, MyInfo, as well as its own know-your-customer and credit assessment system to analyse credit risk, he said.

In this aspect, it aims to be a role model for others in the region, especially in South-east Asia, he added.

Mr Cherumadathil also said that there is "no cap" on the investments that Toyota Financial Services intends to bring into Singapore and that it is likely to grow its business here in line with customer demand. The team, which has about 15 staff now, is also likely to expand together with it, he added.

Even with the uncertainty brought about by Covid-19, he is optimistic that there will be an upward trend going forward as the "hardest time hopefully has already passed".

"At the end of the day, the auto loan industry has always been a key cornerstone of the automotive industry," he said. "Covid-19 or not, we are here to stay and we need to embrace the situation."