RBI’s hike in interest rate to hit demand in car sector

Acting as another major hurdle for car industry after soaring fuel price and expensive financing issues, RBI’s recent rate hike is going to make the problem worse. Due to repeated increment in interest rates (ninth successive) and towering EMI’s, car industry could face massive slow down this fiscal.

After recent hike the interest rate is going to touch the mark of 13% and with the addition of increased fuel prices, even reaching to the half of last fiscal year (2010-11) figures looks difficult as told by prominent market players.

Janeswar Sen of Honda Siel Cars said that situation is altogether different. This increase will not only hamper the prospects of retail sector but will also make consumer think twice or before getting a replacement or an additional car.

Arvind Saxena, marketing and sales director of Hyundai India said that, recent hike has throttled the interest rate to its highest level in recent times. If previous data is analyzed then this retail interest rate happens to be highest in last six to seven years. Furthermore, the car dealers are already facing steep drop in enquiries and conversion rate is going down so this hike will make situation worse.

Managing executive officer of Maruti Suzuki India, Mayank Pareek said that the car market is already facing so much issues and this hike will definitely have an unfavorable effect on it.Furthermore, Deputy MD (sales and marketing) at Toyota Kirloskar, Sandeep Singh, said that due to the RBI’s hike, the EMI is increasing and in-turn the number of customers coming to showrooms is decreasing severely.

This is to be noted that for taming the inflation rate, RBI is hiking key policy rates. And this was eight time since March last year when car consumers are facing another hike.