Reserve Bank of India is ready to increase the interest rates on short term and long term loans with some 50 basis points. This means that auto loans in India are ready to get more expensive, though industry experts feel that market sentiments are not likely to be dampened by the new rates. Markets have been bullish since a long time and auto makers have already increased rates of their models four times already this year, but nearly every auto maker continues to report double digit growth. Industry experts hence feel that yet another hike in interest rates is less likely to create a long term dent on the market sentiments.
"We believe there is enough power in the economy and these rate hikes will not impact demand. Even in the short term, as the festive season is round the corner, we expect demand to continue," said Pawan Goenka, President of Society of Indian Automobile Manufacturers (SIAM).
Similar sentiments were echoed by Maruti Suzuki CFO Ajay Seth who agreed that while an increase in rates may affect sales and finances, it is not likely to make a strong impact on the market.
