Supporting the dramatic improvement of lives in developing nations

Financing business to encourage the spread of automobiles

Automobiles improve the people's lives dramatically, expanding people's range of activities and boosting convenience remarkably. However, they are expensive and for many are not easily obtained. Sumitomo Corporation Group provides financing to people who want to buy automobiles in foreign countries and encourages the spread of automobiles in many countries.

Generally, the financing business consists of five processes: application, credit control, contracting, financing, and collection. First off, we examine loan applicants' repayment capacity. It is imperative to confirm their repayment capacity before lending. After applicants are approved, we enter into a contract with them and provide financing. Finally, we collect the money lent and provide others with finance using the collected money. In the financing business, the commercial product that we handle is cash, and the customers are general consumers, and therefore, organizational power, internal control, and financial power are very important.

Sumitomo Corporation Group has developed the financing business to encourage the purchase of automobiles in Southeast Asia, East Europe, Mexico, and other regions. Using an Indonesian case—one of the largest in scale—the following is an example of our automotive retail finance business.

Sticking to the basics

Indonesia has a population of about 230 million people. The number of four-wheeled and two-wheeled vehicles bought during year 2008 stood at approximately 600,000 and 6,000,000 units, respectively. Sales of two-wheeled vehicles, in particular, are expected to soar in the future. In this huge market, Sumitomo Corporation holds PT. Oto Multiartha for four-wheeled vehicles and PT. Summit Oto Finance for two-wheeled vehicles (collectively the “OTO Group” hereinafter).

OTO Group, which has more than 10,000 employees, has developed a branch network throughout Indonesia centering on Java and Sumatra. The group's strength is that it ensures and utilizes organizational power, internal controls, and financial power, which are the three core factors in any financing business.
Focusing on organizational power, three organizations—marketing, collection, and administration departments—cooperate in the processes of acquiring applications, credit control, concluding contracts, financing and collection. Regarding internal controls, an audit unit has been established as an organization independent from marketing, collection, and administration departments. It not only conducts regular audits, but also allocates audit staff to individual branch offices and confirms the state of credit control, administration and collection on a daily basis to exercise internal control. For financial power, the group is financially backed by Sumitomo Corporation and can maintain the business in a stable manner. In particular, during the Asian Financial Crisis that hit in 1997-1998, Indonesia's 2005 economic crisis, and the global financial crisis of 2009, while competitors faced financial problems, OTO Group was able to continually provide financing and this contributed to an increase in automotive sales. As a result, it won the trust of both automotive manufacturers and dealers.

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