Published in Malaya Business Insight on September 04, 2018/By RAYMOND GREGORY
LOCAL automotive financing has been straddled by many issues including low fullfilment rates for approved loans and skyrocketing interest rates. Vehicle sales have however continued to grow in the last six months and despite a temporary slump are expected to regain vitality towards year end.
Sensing this sales potential as an opportunity for a financing business, the Taiwan Acceptance Company (TAC) established the Yulon Finance Philippines Corporation (YFPC). The new company was inaugurated last week in simple ceremonies at its headquarters in Bonifacio Global City.
"In the Philippines, the GDP has reached 6 to 7 percent in recent years, in which it is the leading country in global economic growth. The sales volume of the automobile market has also grown rapidly with an annual growth rate of about 20 percent," Hsu Kuo-Hsing, Chairman of Yulon Finance Philippines Corporation said at the opening of the new company at the 17th floor of the Curve building. Also present at the opening were Taguig City Mayor Lannie Cayetano and Taiwan Economic Cooperation Organization (TECO) Ambassador Michael Hsu.
Taiwan Acceptance Company, the parent company of YFPC, is the vehicle financing arm of the Yulon Group. Its financial expertise is the backbone of YFP. Having TAC’s backing both in assets and technological support is YFP’s distinct advantage—providing dealers with better and faster transaction experiences which can later be passed on to customers as savings.
"If you look at the car sales situation, one of the factors that slows down sales in the fulfillment rate. The ratio of fulfillment is very low compared to other countries in Southeast Asia or in Taiwan, or the United States," Steven Hu, President and CEO of YFPC said. He explained that one of the reasons for this is that banks as traditional financing companies have auto loans only as part of their bigger portfolio of financing instruments.
"Our biggest advantage is the fact that we are focused solely on automobile sales," Hu adds stressing that YFPC is focused on new car financing exclusively, and offers dealers an alternative to traditional bank channels.
"Bank approval is a highly tedious task," remarks Chock Camacho, Head of Sales at YFP. “What we offer in terms of the overall car financing scheme can help dealers set up a purchase faster and make dealers more capable of a handling a bigger volume of sales. This includes faster transaction processing, faster remittance of payments to dealers and even floor stock financing.
Camacho also explained an innovation unique to YFP’s processes whereby documents are submitted by dealers using an app. An automated process to validate and authenticate the documents is done and the system makes an approval and then a payment is made.
"The app allows the sales person to take photos of the required documents and send it us in real time. No need for couriers," Camacho says.
YFP was set up in April this year following over a year of preparation with an initial capital of P750, 000,000 (US$15 million). It currently has 30 full time employees.
The new company also intends to innovate on traditional financing offerings such as vehicle leasing. This will apply especially to high acquisition, medium-term use transport equipment such as trucks and heavy duty equipment including tractors.