OTO Capital: Bringing In Better Options To Buy Vehicles And Helping Automobile Sector

The automobile sector in India is currently in need of a change of paradigm to revive it’s sagging numbers. There seems to be a huge downfall in the number of people buying or even wanting to buy cars or two wheelers now. The outlook looks grim for the sector as a whole unless some fresh ideas and concepts flow in. OTO Capital, a Mumbai based startup is ushering in a new way to buy and own your vehicles and fixing an important gap in the sector.

Vehicle ownership in India has been stuck in the previous generation mindset of owning the car as a long-term asset. Compounded by rigid financing and ownership models, India has seen a significant drop in car ownership, notably among the younger generation. The frequency with which new car models are being introduced and the rise in usage of connected cars is rapidly changing the vehicle ownership experience. The upwardly mobile younger generation of Indian customers are keen to get to their dream car earlier, without being stuck with it forever. The first-car buyer age has come down significantly and customers are now seeking faster access to vehicles, low-cost EMIs and quicker upgrades.

The traditional car loan is very limiting and is based on the old school philosophy that long term ownership of a car is an asset for the buyer. But the new age buyer is living and working in the gig economy and a lot of paradigms are changing. While they like buying the latest smartphones which are seen as an extension of their personality, they are extremely hesitant or apprehensive about buying cars or houses. they want to travel all over and collect experiences instead. So when it comes to possessing a car, the current generation wants a few key things covered. They are:

  1. The monthly impact on their budget should be as minimal as possible
  2. There should be freedom of choice when it comes to how long they need the car as their lifestyles are now nomadic
  3. There should be an easy upgrade option
  4. The documentation and process to buy a car on a loan should be as compact and easy as possible

When you take these factors into consideration, the traditional car loan is extremely heavy and obsolete in terms of fulfilling the needs of the young generation. There is also the fact that two-wheelers are better options for the upwardly mobile young people. This gap can be the key to turning around the sagging fortunes of the automobile sector. This is where mumbai-based OTO Capital is helping buyers with custom solutions that solve these problems and make possession easy and swift

OTO has a custom offering called the My OMI Plan, which is the most affordable and flexible financing option for consumers to purchase two-wheelers of their choice at any dealer showroom. With the My OMI Plan, customers now have an affordable and flexible option of owning a two wheeler for a fraction of the cost which is upto 30% lower than existing two-wheeler EMIs. One of the significant causes for the recent slowdown of the automotive industry is believed to be caused by challenges in financing vehicle purchases. While the government is taking measures to boost demand, options such the My OMI Plan could bring buyer interest back on track by making it easier for customers to finance automotive purchases.

With the My OMI Plan, customers can walk into any two-wheeler showroom, get an instant approval and ride home their brand new vehicle under 30 minutes with zero paperwork. Under the plan, customers pay a low down payment, as little as INR 5000 which is refundable and OMIs (Ownership Monthly Installments) that are 30% less than loan EMIs. Customers can choose the tenure of their OMIs, which ranges from 1-3 years. At the end of the chosen tenure, customers have the flexibility to walk away with no obligation, or upgrade to another brand-new vehicle, or make a simple balloon payment to retain the same vehicle.

Buyers also get a convenient, all-inclusive OMI that includes bumper to bumper insurance and maintenance. The company has partnered with more than 100 dealers in the city, including Aryan Suzuki, Sapphire Honda, Tansi Honda, Avanish Suzuki and many more to offer customers the new financing option. OTO has already financed more than 140 two wheelers in its pilot phase in the last 45 days. Currently My OMI Plan is available to customers in Bengaluru and Mumbai and in the next one year OTO will expand into 10 other Indian cities.

OTO also has similar options for car buyers too. In the cities that they are operating in, they are in the Top 3 lenders list when it comes to the brands that they are tied up with. The reasons for their plan being better is due to the factors below

  1. You can walk into a showroom and select/buy a vehicle in a matter of minutes
  2. The banking partners of OTO get the benefit of the company taking care of risk management
  3. The buyer has the option of buying the vehicle or upgrading to another one available to them
  4. Since the vehicle is leased and not owned, in extreme cases where repossession has to happen, there is no change in the resale calur of the asset and hence the banks get better value because they need not just auction the vehicles like they do with bad car loans

OTO partners with Banks and NBFCs to provide the capital and offers customers with an alternative option for financing automotive purchases. OTO provides a full auto-lifecycle management, from credit underwriting to insurance, maintenance and eventual resale of the vehicle. Partnering with OTO helps traditional and large banks to offer flexible models of ownership and incentivize the new-age buyer by offering an all inclusive package. With the slowdown in the automotive sector, partnering with OTO gives car loan departments of banks an opportunity to quickly move into car leasing without any change in their internal processes. OTO is enabling Banks and NBFCs to serve newer and wider set of customers who were earlier shying away from car loans.

OTO’s instant-approval model allows customers to walk into a car showroom and drive home their brand new dream car in 30 minutes for a low down payment of as little as INR 25,000. Buyers also get a convenient, all-inclusive EMI that includes bumper to bumper insurance and maintenance. At the end of the chosen 3-5 year period, users have the flexibility to walk away with no obligation, or lease another brand-new car, or make a simple balloon payment to retain the same car. By partnering with dealers, corporates and automakers, OTO has become the fastest-growing alternate option to car loans. The company has already signed up 15 corporates where employees enjoy hassle free financing along with flexible ownership and additional tax savings.

How it works

OTO buying process

Every year in India, more than 6.25 million are sold out of which more than 60% are cars are financed. Car leasing is a popular method of owning cars in mature markets such as the U.S. where more than 30% of all cars sold are leased. India is expected to see a similar turnaround where customers value access over ownership and car leasing becomes a more viable and preferred alternative, especially among the young buyers. One of the significant causes for the recent slowdown of the automotive industry is believed to be caused by challenges in financing vehicle buys. While the government is taking measures to boost demand, alternative finance options such as OTO Capital could bring buyer interest back on track by making it easier for customers to finance automotive purchases.

LtoR - Harsh Saruparia and Sumit Chazzed
LtoR – Harsh Saruparia and Sumit Chazzed

Founded in 2018 by IIT-Mumbai alumnus Sumit Chhazed and Harsh Saruparia, OTO had raised INR 5 crore in its first round of funding, led by Venture Catalysts and participation from veteran angel investors K.Ganesh and Sameer Sawhney. The startup has 20 employees in Mumbai and is soon setting up offices in Bengaluru.

 Prime Venture Partners recently announced an investment of INR 10 crore in OTO. With this investment, Prime Venture Partners has invested in nine startups in the fintech sector including Recko, Ezetap, Happay, KredX, MoneyTap, NiYO, AffordPlan and Perpule. The seed stage fund, led by serial entrepreneurs Amit Somani, Shripati Acharya and Sanjay Swamy, has one of the largest portfolios in the fintech space, in addition to companies in the SaaS, Healthcare and Education sectors.

Prime has a history of backing really good, scalable and much needed solutions in the fintech space and after talking to the founders, we are  convinced that this will be another feather in the heft of Prime. We will be watching this young startup that could give a much needed impetus to the auto industry very keenly in the future. It will be interesting to see where the go next.

About Shakthi

I am a Tech Blogger, Disability Activist, Keynote Speaker, Startup Mentor and Digital Branding Consultant. Also a McKinsey Executive Panel Member. Also known as @v_shakthi on twitter. Been around Tech for two decades now.

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