A third of smartphone buying likely to be financed this year

New Delhi: In 2023, one-third of smartphone sales in India is projected to be financed, seeing a notable increase from 25% in 2022 and 18% in 2021, driven by brands offering attractive schemes in response to a surge in festive season purchases.

“Since the post-covid time, 2023 will see the highest-ever share of smartphones that are bought by consumers using finance schemes. Half of the sales of the premium segment (above ₹30,000) is expected to be from easy finance options. For affordable segments (sub- ₹30,000), this will be the first time that the share will rise to 25% of total sales,” said Tarun Pathak, research director at Counterpoint Research.

In 2022, about 25% of premium smartphones, including Apple, Samsung, and OnePlus, were sold through staggered payment plans, most at zero interest or processing fee, data revealed.

The trend is gaining traction in the sub-premium segments, with brands such as Xiaomi and HMD Global tying up with financing partners, including banks and non-banking financial institutions.

Industry insiders said Samsung’s return to India’s smartphone market leadership position since late 2022 was on the back of its finance scheme called Samsung Finance Plus, allowing buyers to choose from a variety of payment plans, including card-based cash back plan, exchange or an 11-month EMI option, which was longer than the six months plans provided by other brands.

The South Korean major for the first-time allowed loan takers to avail the finance options across cities, towns, and villages, yet managing to maintain the lowest delinquency rates among industry peers. Industry executives said that finance schemes will be preferred by consumers following the 30% increase in prices of smartphones in the past 12-24 months.

“Average sale prices are rising, though smartphone market is shrinking, which means consumers are asking for high-end devices that are at higher price points and that’s where affordability plays a big role,” said Ravi Kunwar, vice president-India and Asia Pacific at HMD Global.

The firm is offering digitally-approved loans without any paperwork under HMD EasyPay, in partnership with DMI Finance.

Ravi said by easing the process for financing, especially for first-time consumers who are availing finance schemes or are new-to-credit, it expects 25-30% rise in new customer base for the brand. HMD has a small share of the $38 billion Indian smartphone market, but hopes to increase its share on the back of the affordability programme.

In early October, Xiaomi, which was the market leader earlier, launched its no-cost digital monthly instalment scheme, Xiaomi Easy Finance Program, in partnership with Axio and Trustonic. “We intend to roll out for all our models, starting with Redmi 12,” president MuraliKrishnan B. had told Mint in an earlier interaction.

The scheme for the offline market has helped the Chinese brand to increase its reach, and growing its share in the affordable smartphones segment. as well as high-end devices. “We are seeing strong demand for premium devices even after the first week of sales, driven by financing schemes,” said analysts at Counterpoint.

“The strong demand has set a cheerful mood for the festive season and we believe the strong consumer sentiment will continue in offline sales as well due to parity between offline and online discounts,” they said in a note on festive season sales last week. Festive season smartphone sales were expected to grow 7% on-year in volumes and 15% on-year in average sale prices this year, they added.