TBY talks to Andrés De La Parra Escandón, General Director of NR Finance México, on financing in the automotive sector and the appetite for cars in the Mexican market.

NR Finance México is the leading company in the financial segment of the automotive sector in Mexico with a 26.4% market share. What is the secret behind your success?

NR Finance México's success came with the growth of Nissan in Mexico; we are the captive company for Nissan, Renault, and Infiniti. We have been growing together with the OEMs during a period in which many new opportunities emerged within the automotive sector. In the finance segment of the Mexican automotive industry, three main players can be identified: banks, consortiums, and captive companies. After the financial crisis, we saw many banks exit the sector, creating many opportunities for companies such as ours. In our particular case, we grabbed the opportunity to increase our market share and that of our brands. We focused on the dealer network to increase both volume and penetration. All in all, that strategy led us to a very successful period, whereby we increased our customer base in Mexico. In this regard, over the past few years we have also created loyalty programs to reward our long-term clients and create a sense of uniqueness.

What is NR Finance México's strategy to increase customer satisfaction?

This is one of the biggest challenges faced in Mexico. Mexican customers have grown more sophisticated over the years, and their satisfaction does not depend on getting a loan from our company alone; they require complementary services, too. For example, we bolster regular communications with our clients throughout the loan period in order to acquire a better follow up on the customer's needs after receiving the loan. In this light, we established our certified contact center area focused on Nissan, Renault, and Infiniti customers that has grown to become the leading such center in the country. What's more, the loyalty program we have implemented gives us a clearer idea of those clients returning to us to meet their financial needs, allowing us to provide them with special products and promotions.

“We see a huge potential for the automotive sector to increase sales volumes."

How would you evaluate the performance of your new products over the past few years?

We have several offers and promotions month by month based on our customers' behavior, market trends, and seasonality. In this context, we always try to personalize and adapt our products to the customers' needs. For example, we launched a month of free insurance for one of the most popular cars in Mexico of the last 25 years, which helped us to increase penetration levels from around 20% to close to 40%. We also have products based on each type of vehicle, meaning they also adapt to the type of client who purchases the vehicle. I should mention that the customer's profile in Mexico varies greatly depending on region. NR Finance México is very much aware of that when it comes to the products and services in its portfolio.

Could you tell us more about your partnership with Nacional Financiera (Nafinsa)?

A large proportion of our clients are SMEs, a segment of the market in which we work closely with Nafinsa, the governmental bank of Mexico. It provides us with very valuable support to have a stronger position in this particular segment. For example, we offer a special loan for SMEs to help them purchase a fleet of vehicles to carry out their business activity. Thanks to Nafinsa's support, we are able to offer reduced interest rates on our loans as well as smaller initial down-payments, as well as other types of facility. In fact, we have gained more than 55,000 such SME contracts since working with Nafinsa, a partnership that has lasted over two years.

What is your growth strategy for 2014?

We have signed more than 324,600 active contracts over the last 10 years. As a very large captive company for Nissan, Renault, and Infiniti, we want to further increase our presence in the market, for we have products that appeal to all types of people. In this context, we have a special interest to become a stronger player in the fleet segment of the market. Additionally, we believe that there are some interesting opportunities in the subprime segment of the sector, one in which very few financial companies currently operate. Finally, we will also continue working in the further specialization of the company in certain regions of the country.

What is your general outlook for the sector in the next few years?

We see a huge potential for the automotive sector to increase sales volumes. The year 2013 saw the volume reach 1.1 million units; however, the potential is much higher than that. I also perceive great potential to increase the number of cars manufactured in Mexico. In this regard, Nissan opened its third production plant in the country in October of 2013, and we should keep in mind that cars manufactured here are exported to as many as 100 different countries. However, I believe that the government still needs to amend certain local regulations in order to boost domestic sales.

How would economic reforms in Mexico impact your business activity?

One of the government's main economic reforms was to increase the availability of credit to both companies and individuals, the aim of which was to increase loan recovery options, which benefits financial companies. Legislation regarding the provision of loans is set to change, whereby there will be more relaxed requirements to access credit lines. It is also planned for the credit bureau to become more transparent and make information public, meaning that we will be able to assess customers much better by knowing their levels of debt and credit history.

Mexico has the potential to produce 4 million cars per year. What are your views on that, and what are your future goals in this scenario?

We are very much linked to the development of the automotive sector and our strategy should focus on how we would like to support vehicle sales in Mexico. Our loans are focused on creating an additional customer base for the market and supporting the sale of vehicles. We expect to see an increased volume of both production and sales in Mexico over the next few years. Currently, our penetration with Nissan is 46% and 57% with Renault. Our main object is to increase those figures, especially for Nissan vehicles, where we target the 50% level. Nowadays, one in every four vehicles sold in Mexico is a Nissan, and in the financial segment of the sector, one in every four Nissan vehicles sold in Mexico is purchased through our company. We do not set any limits in terms of growth and our goal is to improve our current business performance and service to expand our activity. Regarding Infiniti, we currently account for 68% of the brand's total sales in Mexico, of which 80% are made through leasing, a segment we also want to expand in the near future. I believe the used-car segment is set to bring us very interesting growth opportunities. All in all, I think we have the capability to increase our market share to 28%.

© The Business Year - April 2014