Car sales growth dips as Car loan rates rise
Growth in car sales at most car makers was slower in April than the previous month as several companies raised prices to offset the impact of higher raw material costs. Also, borrowing costs are rising as the reserve bank increases interest rates to tame inflation. April sales are also traditionally lower than in March when companies in India give bulk orders for vehicles to save on depreciation costs in the past financial year.
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Car sales in India grew at a record 27% in the financial year ended March 31 to 15.51 million units but the industry expects the pace this year to be around 12%-15% due to the higher sales base. Local car sales rose 30% in the past year, the fastest in more than a decade, to 1.98 million cars.
High interest rates has been the key issue to slow down the rate.State bank of india has increased rates from 8% to 11.5% in last three months.Other key players like Hdfc, Icici, Kotak has also increased rates.This has led to lesser people opting to buy a car.
The input cost for Car industry has also increased so they are not offering too many discounts to increase sales.But the major factor is high interest rates which takes consumer away from buying a car at a higher emi.
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