India’s central banking institution, Reserve Bank of India (RBI) has stated that they will soon be increasing interest rates on various loans in India. Because of this, car manufacturers in India, who are already going through their worst period in 2 years, fear a further drop in growth rate.
Indian auto industry is the second fastest growing auto industry after China today. But thanks to reasons like hike in interest rates and fuel prices, the industry is currently going through a bad patch. Car makers are finding it difficult to register as many sales as they used to in the past few years.
Mr Jnaneshwar Sen, Senior VP, Honda Siel Cars India, after hearing the RBI news, said, “It seems that now auto loan rates will go up and this is going to impact us definitely. Growth rate has already come down.”
Mr P Balendran, VP, GM India, said, “The rate hike is going to further slow down the market. The Indian automobile market is already under a tremendous amount of pressure. We were expecting this time the rates to be unchanged, but the RBI has other priorities as well.”
It is not that Indian auto industry will register fewer sales than last year, but it will probably fail to keep its momentum of growing at 30% annually this year. When asked about further drop in growth rate, Mr Sen added, “It is difficult to say at this moment, because usually the market picks up during August-September on account of the festive season.”
Mr Ajay Seth, CFO, Maruti Suzuki India, said, “Market condition continues to be sluggish and the rate hike by the RBI by 50 basis points will have an effect on consumer sentiment.”
Mr Deepesh Rathore, MD, IHS Automotive India, believes that the demand will continue to decline even during the festive season of Diwali. He said, “It (rate hikes) will have an impact on the auto market. This festive season will not be as good as that of last year’s. We hope the interest rates should stabilize by the end of this calender year. We are not very optimistic for the next few quarters for all car manufacturers.”