TBY talks to Nobuyuki Fukushima, President of the Board of Mitsui Auto Finance (MAF) Peru, on starting out in the Peruvian market, working with dealerships, and the role of technology in operations.

Nobuyuki Fukushima
Nobuyuki Fukushima was born in October 1965 in Japan, and studied mechanical engineering at the University in Japan. He has worked for Mitsui Japan, and likes golf, fishing, and tennis. In 1985 he went to Keio University to the School of Machinery and Sciences and graduated in 1989 having specialized in fluid mechanics. His career with Mitsui led to his spending extended periods working in France, Algeria, Venezuela, Colombia, and Chile.

What strategy shaped your initial entry into the Peruvian market, and what was unique about your approach?

Our goal for implementing new financing here was to help middle-income people buy new cars in a difficult environment. A line of credit is hard to come by, due to conservative banking policies. We are conservative, but we do extend credit to suitable customers in a workable manner. For example, we have a product called “Renueve" which allows our customers to enjoy a new car every two or three years, letting them take advantage of the best part of the useful life of the car with the lowest down payment and the most convenient monthly payment on the market. This represents a 45% saving in monthly payments when compared to conventional credit. The benefits of this product with MAF are innumerable. Those who have thought about buying their first vehicle at a lower price will be able to opt for a much more expensive vehicle with a more convenient payment. More importantly, when it comes time to replacing the car, the client doesn't pay the cost of the depreciation of the vehicle because the remaining value of the vehicle is turned into the down payment for the next car. Finally, our clients pay only for what they use and not for all the additional costs that can be generated through the use of a car over the years, such as depreciation and maintenance costs, for example. Products like this are possible because we know firsthand what the residual value of that car will be in the future. The way that banks evaluate the credit-worthiness of customers is totally dependent on their credit history and record, as well as their revenue profiles. Our focus on middle-income people is entirely new to Peru. I saw the potential in this market early on, and we transformed a former Mitsui's leasing company into a new finance company obtaining the license from the SBS (Banking Superintendency) in 2010 after a three-year period, which has given us a substantial head start against our competitors.

How did the market respond to your model?

In 2011 we placed relatively few loans, as was the case in 2012. However, 2013 was our first year of real operations, and we had $100 million worth of loans on our portfolio. In 2014, too, we placed more than $100 million worth of loans. Indeed, MAF closed 2014 as the second largest auto loan provider in the country.

What other flexibility does your form of finance represent beyond the facility of a large down payment? What due diligence do you perform on clients?

We have a presence in the dealership. As you know, the car dealers identify the opportunities and establish relationships with customers. We establish a close relationship with them because it is a key part of our business. That is why we have a presence in every Toyota dealership in Peru. We make a quick assessment of the client, taking less than an hour. If customers go to a Toyota dealership and are introduced to our loan executive, they leave the dealership knowing whether the car and financing will work out. That is vital because ultimately buying a car involves an emotional decision.

How do you make that credit decision?

We take available credit information and essentially interview the client about their income, and make a decision based on the data on hand. Customers must support their data with documentation, but once cleared, the credit is approved, and we deliver the loan. What makes MAF different is our ability to respond quickly, delivering both the loan decision, and where the outcome is positive, the loan itself.

How does technology support your business?

We brought our technology from Chile where we developed our systems and our entire web-based capabilities. We deliver the application approval quickly because all systems are linked. MAF also supports its business through an efficient collections process and quick repossession of cars to repay the outstanding amounts. At the end of 2013, our group consolidated an Auto Loans portfolio exceeding $400 million in Peru and Chile. In 2014, even after a difficult foreign exchange rate climate in South America, we further increased our portfolio.