By: Rajesh Kurup & Mithun Dasgupta
The passenger automobile (PV) section and shopper durables could not get impacted a lot by the speed hike introduced by the Reserve Bank of India as a result of the demand for them is excessive. However, for two-wheelers, the place there may be already stress by way of demand, the transfer can be additional detrimental, trade executives mentioned.
“There’s a long waiting list of customers for passenger vehicles. Demand is chasing supply, so the rate hike won’t make much of a difference,” RC Bhargava, chairman, Maruti Suzuki India, instructed FE. “However, it would adversely impact two-wheelers because of the demand problem,” he added.
Bhargava mentioned there’s no direct linkage between RBI asserting fee hikes and banks passing it on to shoppers by way of rates of interest. “It’s supply-demand and risk perception which determine rate hikes by banks,” he mentioned.
Nikunj Sanghi, president of Automotive Skill Development Council and a serious auto vendor, echoed Bhargava’s views. “Interest rates will go up and cost of ownership will also go up as a result of RBI’s move, but where there’s demand, there won’t be a problem, it will also go up. This applies to PVs. However, where there’s stress, like in two-wheelers, there will be further problems,” he mentioned.
“The PV segment may be able to absorb this shock due to long waiting periods, but the two-wheeler segment, which has been a non-performer due to the underperforming rural market, vehicle price hikes and high fuel costs, will not be able to take one more blow of high vehicle loan costs,” Federation of Automobile Dealers Associations India president Vinkesh Gulati mentioned.
The identical applies to shopper durables like air conditioners, fridges and comparable different home equipment. Retail chain Great Eastern Retail’s director Pulkit Baid mentioned the speed hike is unlikely to affect demand for shopper durables as it’s not prone to enhance the price of loans very a lot. “Cost of consumer durable loans for consumers may increase very slightly, so it will not impact demand,” Baid mentioned.
“Given that finance penetration in the consumer durable sector is low at around 20-25% and 0% financing schemes are the preferred choice, we do not see a meaningful impact of the repo rate hike on demand sentiments for the consumer durable sector,” Pushan Sharma, director, CRISIL Research, instructed FE. “However, there can be some indirect impact, if at all, given that purchasing power of consumers stands to be impacted to some extent,” Sharma mentioned.
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Source: www.financialexpress.com”