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Mexico 2014 | FINANCE | INTERVIEW

TBY talks to Jorge E. Álvarez, CEO México of BNP Paribas Personal Finance, on automotive finance, the motorcycle market, and the country's financial reforms.

Jorge E. Álvarez
BIOGRAPHY
Jorge E. Álvarez was born in 1972 and has wide experience in operational risk management and business development. Previously, he held several high-ranking positions at GMAC, working in places such as Argentina, the UK, Spain, and Greece. He has also been General Manager of Ally Financial Inc. in Ecuador, joining BNP Paribas Personal Finance Argentina in 2010 before he took up his current position in 2013.

What is the significance of the Mexican market for BNP Paribas?

This year we will celebrate our 10th anniversary here in Mexico. We initiated our activity in a shy way a few years back. In mid-2013, we decided to change the focus of the company. Our company was solely focused on the automotive finance business, and in response we have instituted a three-year development plan with our various subsidiaries. For the personal finance sector, 80% of growth for the next three years will come from the automotive business, so the focus in Mexico is on the automotive finance segment. The automotive industry has been growing steadily since the last crisis and hopes to continue on this path, aiming to reach 1.7 million units in a few years. In 2013, we closed with over 1 million units sold. We see a trend in the automotive finance market that is growing faster than the automotive industry. In 2013, our portfolio of auto units grew by 65%.

What new products are you planning to launch in the automotive market?

We have a great product for the automotive business through which we targeted the new and used vehicle market for SMEs and consumers. As well, we are focusing on the motorcycle segment. We enjoy strong collaboration with Harley-Davidson, Bombardier, and KTM. We aim to use KTM Finance as a brand to finance its motorcycle sales. We are also talking with Polaris to launch the same finance model, and have another agreement with Suzuki. We think that the motorcycle business has to grow; currently, the number is at 350,000 to 400,000 units a year, but the potential is huge. In Argentina, 800,000 motorcycles per year are sold, yet its population is just one-third that of Mexico.

How are the company's services performing in the motorcycle market?

I was with BNP in Argentina, where we are the leaders in motorcycle financing. We provide one out of every four loans for motorcycles in Argentina, meaning we have a strong knowledge of how to handle this credit. The performance of our finance services in the motorcycle market is the best in its class in Mexico. This market has a range of financing offers available, and BNP Paribas Personal Finance (BNPP PF) has the expertise to analyze and grant the necessary credit. Today, we are working with prestigious brands such as Harley Davison, KTM as KTM Finance, and we are about to launch Suzuki Financial Services Moto. The service is the same as auto, as in less than 20 minutes the customer can find out the result of a credit application, and all they need is their customer ID without any other documentation.

What trends can you identify in automotive finance in Mexico?

Financing in Mexico is showing an uptrend; finance is growing and will be a key player in reaching the volume expected for the automotive industry. Within the market, competitiveness is on the rise, with a strong presence of captive financing companies and banks fighting to increase their participation in the market. Credit will have to grow; currently, the average credit penetration for new cars is at around 50%, which is quite low for a mature market. We should be looking at 70% or 80% for finance penetration. If you combine all the factors, the potential for growth for the country and the automotive business and finance market is high; this is why we are investing.

What is your outlook for the automotive financing sector in Mexico in the medium term?

Our outlook is that the uptrend will continue, and that the financing share will be key for the automotive industry, while the dealers will need a finance partner with better services and competitive offers. In 2013, BNPP PF grew 65% in the auto segment compared to 2012. For 2014, we are planning to grow by more than 70%. As mentioned, Mexico is a focus of development for BNPP PF, and we are in an aggressive development process that should allow us to quadruple our auto loans portfolio by 2016.