Latest Car News in India

Monday, June 20, 2011

By Pranjal Gera

RBI raises interest rates on car loan- negative impact expected on Auto industry

In a recent decision, the Reserve Bank of India raised its key interest rates by 25 basis points, a move that was not greeted by most of the auto companies.

The Indian automobile market is already in a slow growing state due to the rising prices of petrol and now this move of RBI will further lower the sales.

Mr. Pawan Goenka, President, Auto & Farm Equipment Sector for Mahindra & Mahindra said that by this move, RBI will cause a major impact on the Automobile market and now the other banks need to be closely observed to see how much pressure is to fall on the buyers.

The RBI raised its short-term borrowing rate to 6.5 % with a similar margin as to its short term lending rate, which was incremented by 25 basis points to 7.5%.

A Balendran, Vice-President for Corporate Affairs, General Motors India also showed his concern over the rising interest rates and said that RBI’s move will surely bring the automobile market down.

Rajeev Kapoor, President and Chief Executive Officer for Fiat India said that this step of RBI will directly affect the sales, and soon, the situation of the market will get worse.

Some of the popular hatchback models in the Indian auto market are Ford Figo, Maruti SwiftHyundai i10, Chevrolet Beat and Volkswagen Polo. Apart from these popular models, cars going to hit the Indian roads this year are Toyota Etios Liva, Maruti Cervo and New Ford Fiesta.

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