Financing Mexico's Automotive Sector

Q: BNP Paribas Personal Finance arrived to the Mexican market with traditional products. How has the bank’s offering changed since then?

A: We started operations in Mexico in 2004 with our consumer finance products. Back then, we offered credit cards, payroll loans and loans for cars and motorcycles. In 2012, after a strategic reorganization, we decided to focus our business on the automotive sector and we added financing products for distributors with our Plan Piso. Three years ago, our portfolio of loans to distributors totaled MX$200 million; today, that has grown to almost MX$5 billion.

We decided to focus our operations on the automotive industry because it is the market in which we felt most comfortable and where we saw the largest growth potential. We knew that even though the market would be competitive, we were going to continue growing. We saw growth opportunities and, thanks to our team, commercial partners, financial products and added value, we have succeeded. We focus on individual loans for people. Even though the automotive business also includes the fleet segment, we have not fully explored that business line.

Q: What trends are you seeing regarding financing in Mexico?

A: In the automotive sector, the percentage of financed sales is growing on a yearly basis, which also generates growth in the automotive sector. Over 60 percent of car sales are funded, but the potential is even greater.

Q: A pressing problem in Mexico is the number of people working in the informal sector, limiting access to financing. How can institutions foster inclusion?

A: Our idea is to continue broadening the credit base and we are looking at options to do that. The DNA of BNP Paribas Personal Finance spurs it to offer credit at reasonable prices. Nevertheless, we are analyzing how far can we go, while also asking clients to confirm their financial capabilities. It is not only a matter of payroll receipts; there are several ways clients can confirm their income.

Q: When it comes to financing, what are the main differences between Mexico and other Latin American countries?

A: There are not that many differences. For instance, in Brazil, the main banking institutions play an important role, whereas in Mexico brand financers have the largest market share. In Colombia and Chile, the only difference is that leasing is more incipient than in Mexico, where it exists as a product with a final consumer credit that is not as common. In some other Latin American countries, leasing is more advanced, but it has not reached the levels that we see in the US or some European countries.

Q: What is BNP’s relationship with OEMs such as KIA, Volvo and Peugeot?

A: Our brand target is very limited, since many OEMs already have a brand financer and a few others have agreements with banks. It is a limited market into which we would like to expand. We have a strong working relationship with KIA, Volvo and Peugeot. Although we are working with a few other brands, those relationships are not a strong yet. Alliances arrive through many channels and due to several reasons. One of BNP’s strengths is that we have relationships with OEMs everywhere in the world, which means that we hold a relevant position at a global level.

Q: What is BNP Paribas Personal Finance’s short and midterm view?

A: BNP Paribas Personal Finance will continue investing heavily in Mexico and we expect our Consumer Finance segment to keep growing. We are in the process of defining our objectives for 2020, but those will follow the same line of growth and present new financial products to the market.