Bengaluru, 5 September 2019: Prime Venture Partners today announced an investment of INR 10 crore in OTO, India’s first retail automotive leasing company. With OTO, new car buyers now have an affordable option of leasing a car for a fraction of the cost at an EMI that is 30% lower than existing car loans. Buyers also have the flexible option of buying the car at the end of the 3-5 year lease period. Currently available at more than 150 dealers in Mumbai and Bengaluru, OTO has already leased cars worth more than INR 10 crore in the last 6 months. OTO is leasing out more than 40 cars per month and plans to grow 10X by early 2020. The company will be expanding to 10 cities in India in the next 6 months and increase its partnerships with automotive dealers, banks and NBFCs.
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.
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.
OTO allows just that. 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 OTO WORKS
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.
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.
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.
Sumit Chhazed, cofounder, OTO
We see a huge opportunity in providing auto buyers with an alternate finance option in a sector which has hardly seen any innovation in the past. The initial customer traction we have achieved in a short time reinforces our belief in this space and we are on a mission to make vehicle ownership more affordable, hassle-free and quicker. Prime is the leading fintech investor in the country and we’re delighted to be working with them to bring an exciting new option for the Indian car buyer, and play a role in kick-starting the revival of the auto industry.
Sanjay Swamy, managing partner, Prime Venture Partners
Car leasing is a huge gap in the Indian auto industry. OTO is ushering in a new, long-term growth-lever for the automotive sector. Several car buyers need flexibility and medium-term options rather than just short-term rentals or permanent choices. Sumit and Harsh are amazingly passionate entrepreneurs and we have been very impressed by the progress made by the team over the past year. We are excited about the huge demand for this service and are delighted to partner with the company to build a solid franchise.
OTO is India’s first automotive leasing company targeted at retail customers. Founded in 2018 by IIT-Mumbai alumnus Sumit Chhazed and Harsh Saruparia, OTO partners with Banks and NBFCs to provide the capital 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. For more information, please visit: https://otocapital.in/.
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