Auto financiers are pushing the automotive industry to embed financing directly into the car sales process, shifting from generic EMI products toward integrated digital credit at the point of sale. This call for innovation was a central theme at the Federation of Automobile Dealers Association (FADA) 5th Finance and Insurance Summit 2026 held in Mumbai, according to Business Today.
The Push for Seamless Ownership
Rajan Pental, executive director at Yes Bank, said there was a need to make the process of ownership seamless. "While the industry has been providing auto loans as an instalment product, we have not yet succeeded in developing an embedded product," Pental stated. He observed that today the customer walks in with full knowledge of the car and its features, and the multiplicity of lenders delays the transaction, according to Business Today.
In developed markets, lenders and OEM captives routinely offer fully digital, embedded credit at the dealer or through online configurators, with instant decisions, e-sign, and funding tied to the vehicle order. Business Today reported that embedded finance in Europe and the US is maturing into platform-led models where banks integrate into OEM, dealer, and marketplace journeys rather than selling standalone loans.
India's Contrasting Landscape
In contrast, India's auto finance market remains dominated by traditional loans. According to Business Today, leasing accounts for around 1.5% and subscription for around 0.1% of the market. Pental urged the industry to go beyond ex-showroom pricing and offer schemes designed for every pin code. He said that banks are major users of technology, and there could be integration to offer products to pre-approved borrowers.
Key Voices from the Summit
C S Vigneshwar, president of FADA, said that finance was the lifeblood of the auto industry, and that finance and insurance business were the "load bearing walls" which were keeping auto dealerships viable, as reported by Business Today.
Raul Rebello, MD & CEO of Mahindra Finance, said that the industry had achieved scale, and the gap between rural and urban sales was disappearing. "Today there are many financiers at auto dealerships. It is possible to do a lot of innovations in financing through co-lending," Rebello stated.
Dealer Expectations for Improvement
Vigneshwar added that dealer partners have highlighted key areas for improvement across finance and insurance. In wholesale finance, dealers expect more transparent, demand-led funding and quicker transmission of interest rate reductions. In retail finance, he said there is a need for more robust used-vehicle funding solutions and smoother reconciliation processes. In insurance, faster claims settlement and stronger protection of dealer-led customer relationships remain critical priorities, according to Business Today.
| Speaker | Organization | Key Point |
|---|---|---|
| Rajan Pental | Yes Bank | Need for embedded product; multiplicity of lenders delays transactions |
| C S Vigneshwar | FADA | Finance and insurance are "load bearing walls" for dealership viability |
| Raul Rebello | Mahindra Finance | Scale achieved; rural-urban gap disappearing; co-lending innovations possible |
Implications for the Auto Industry
For manufacturing executives and procurement professionals, this push toward embedded finance signals a potential shift in how vehicles are sold and financed, which could affect dealership operations and OEM captive finance strategies. While the focus remains on consumer-facing integration, the backend implications for dealer cash flow, inventory financing, and insurance processes are substantial. The summit's discussions underscore the need for the auto industry to collaborate with financiers to streamline the purchase journey, potentially reducing transaction times and improving customer satisfaction.
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