Transmission of benefits of past
and present rate cuts by lenders is essential for the automobile sector
to drive out of the slowdown, feel industry observers.
Monetary Policy Committee's (MPC) decision on Wednesday to reduce key
lending rates by 35 basis points (bps) would not have intended impact if
the benefit was not passed on to consumers, they stated.
The RBI has cut the interest rates 110 bps at the last four MPC meetings in this financial year.
massive sales de-growth is attributed by experts to high goods and
services tax (GST) rates, farm distress, stagnant wages and liquidity
constraints. Inventory pile-up at dealership level and stock management
of the unsold BS-IV vehicles have become problem for the sector.
RBI rate cut is one among many stimulus measures to revive the economy,
which should positively impact the automobile sector," Grant Thornton
India LLP Partner Sridhar V. told IANS. But other measures along with
low interest rates were also required to rev up the sector, he added.
of this rate cut is required to reflect from banks to NBFCs and the
benefit of the policy easing should reach customers for it to have any
impact," said Rahul Mishra, Principal, A.T. Kearney.
rise in insurance cost and Rs 5,000-15,000 hike in vehicle prices by
OEMs (original equipment manufacturers) negated the past policy easing
to some extent, Mishra said.
According to the Society of Indian
Automobile Manufacturers (SIAM) figures, domestic passenger car sales in
June declined by 24.07 per cent to 139,628 units. The July figures are
In the commercial vehicle segment, sales were down by
12.27 per cent to 70,771 units. The overall two-wheeler sales edged
lower by 11.69 per cent to 1,649,477 units.
The total sales declined by 12.34 per cent in June to 1,997,952 units across segments and categories.