Auto dealers in India are expecting price hikes from most of the car manufacturers. They are pushing towards their sales targets as RBI plans to review the repo rate once again on 29 July.
The year 2008 is proving to be a difficult for the car industry including auto makers and car dealers. India had been emerging as the fastest growing car market in the world but the market spirits have dampened since past few months owing to various factors including high interest rates on car loans.
RBI planning to review its repo rate once again on July 29 whereby it may hike its Cash Reserve Ratio. This may make the banks increase their lending rates for the customers. The current interest rate for car loans is 15 percent which may be hiked to 16 percent if RBI hikes the repo rate again by 50-100 basis points. This would mean that the EMI would escalate by Rs. 2395 for a loan of Rs.1 lakh for the same tenure.
A further hike in interest rate spells bad news for auto makers who are already fighting high input costs of steel, rubber, copper, plastic, etc. Many car makers have already passed on their rising manufacturing costs to the consumers which has further led to the decline in their sales.
