Auto Industry to Expects Cut in Auto Loan Rates

author image Rishi
Thursday 04 December 2008, 00:00 AM

Indian auto industry may expect nearly 100-150 basis point cut in the auto loan rates. The car industry has been experiencing a slump in the demand and steep decline in its sales since past few weeks. The weak economic fundamentals and high interest rates are the main reason attributed to the decline in sales. The industry expects that a cut of at least 150 basis points will boost the sales considerably. The Reserve Bank of India may announce another round on rate cut in the lending rates.

Auto makers in India are also expecting that a short term correction may appear in their negative balance sheets. However, a full bounce back is only expected by the next fiscal. The short term outlook in the auto sector look depressing but the analysts are hopeful that the auto sector will recover soon due to strengthening economic conditions in the next fiscal. The stock brokers are hopeful about companies like Bajaj, Hero Honda and Maruti but are a little wary of companies like Tata Motors and others.

Tata Motors, on the other hand, has announced a new fixed deposit scheme to raise the funds from the public. It is offering 10% interest rates to its customers for one year deposit and 10.5 percent to the senior citizens. The company has already received a raving response for its insurance and other economic policies and is hopeful to receive good response for its new fixed deposit scheme as well.

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