Dealers Demand Finance Overhaul for Auto Retail Growth

India's auto retail industry is on track to surpass three crore annual vehicle sales this fiscal year, supporting a robust vehicle finance market worth approximately ₹2.65 lakh crore and a motor insurance sector nearing ₹1.25 lakh crore. Automobile dealers are advocating for a transition from OEM-linked lending to dealer-centric credit models, requesting banks and NBFCs to implement real-time funding dashboards and integrated digital platforms. These changes are intended to boost working capital, expedite settlement times, and elevate the customer experience.

Discussions at the FADA Banking & Insurance Summit highlighted the evolution of the automotive retail ecosystem. Following an initial phase of digitisation focused on loan approvals and documentation, the next stage will emphasize connected financial infrastructure. This aims to improve dealer liquidity, shorten cash cycles, and offer retailers real-time oversight of financing and insurance operations, ensuring measurable gains across the sector.

Key improvements include reduced insurance claim turnaround times, now measured in days, and a higher finance satisfaction score for dealers. However, dealers emphasize the need for advancements in dealer-specific underwriting, real-time financial transparency, and seamless digital integration. Finance is crucial for dealership operations, and faster financing remains a priority as technology reshapes the retail landscape, with AI-led underwriting and automated verification significantly speeding up loan approvals.

A central theme was moving beyond OEM-dependent lending models to credit assessments based on a dealership's financial strength and performance history. Participants also supported integrated dealer portals that provide real-time updates on inventory funding, credit limits, and transaction history. While digital integration in insurance claims processing has advanced, dealers still face challenges with survey appointments and claim approval delays, underscoring the need for tighter digital links.