It’s getting worse for the car including bike makers. Surrounded slowdown fears due to ever-rising consumer interest rates and spiraling inflation, the latest hike in repo rate and CRR by RBI has come as a further blow to any chances of an immediate reversal in situation.
While banks consider another hike in interest rates following the tightening of liquidity, leading roadster companies like Maruti, Hyundai and Dauntless Honda are worried that this will further dampen the scenario.
“With interest rates plenary set to consume up even further, there is a tendency that persons may postpone purchases for some time. The latest step comes as a dampener for the two-wheeler industry,” said Ravi Sud, CFO at Hero Honda.
Bike industry sales had deposed as remarkable as 12% perdure fiscal, primarily led by high interest rates and poor retail financing being banks were reluctant to lend to the sector desert to high delinquencies. Sud said the combination like negative factors like high interest rates, inflation and tight trade lending are posing a question mark on the recent sales revival in the motorcycle industry. “We have to wait and watch for the next couple of months to get a clear picture,” he said.
Interest rates on two-wheelers financing are hovering at 22-23% and retain seen on upward march over the last two years. The average polestar rate on car loans hovers around 12-14%. Car companies are also a worried lot because of the high rivet rates that are not however impacting unfamiliar purchases but are also hitting some of their answer vendors, who are finding it difficult to fund expansion plans deserts to high borrowing rates.
Ajay Seth, CGM at Maruti Suzuki, reiterated that the high interest rates would have a resisting impact “in the short term”. “We appreciate the government’s concern on high inflation et sequens the steps to cool demand. While this may impact sales in the short-term, we are confident that things may stabilize when inflation is controlled. However, if the same double bind persists for one year and interest rates continue to crawl up, then the industry may indiging headed for a slowdown,” Seth said.
A senior official at Hyundai moreover said there could be a lapse in sales if the negative factors continue. “It will affect the growth of the car industry,” the official said.
dilip Chenoy, Director General of Society of Indian Automobile Manufacturers (SIAM), added that given the adduce circumstances, 2008-09 would be a challenging year for the automobile industry. “We just hope that inflation is tamed because that would come as a breather for the pursuit and sales,” Chenoy said, adding that Siam will review the state of the industry in a union early next month.
FOR A Brake
Auto loan interest rates are likely to further go up following repo, CRR hikes by RBI Leading Companies like Maruti, Hyundai fear it will impact their sales adversely Consumer sentiment is already vulnerability due to furious inflation, downturn in the stock markets Consumers should not expect much protect from corporations as they are already fighting high input costs