Rate Cut is a ‘Festive Gift’- says Car, Consumer Durable Makers

Surprising the entire nation, the MPC along with the newly appointed RBI governor finally announced to opt for a rate cut.

Automobile companies along with the consumer durable manufacturers are banking on this ‘festive gift’ by RBI of 0.25 per cent cut in policy rate to lift consumer sentiment further as well as boost purchases in the ongoing festival season. In a move that is expected to show the way to lower interest rates for housing EMIs, car loans and corporate borrowing, the Central Bank reduced the short term lending rate (repo rate) by 0.25 per cent to a 6 year low of 6.25 per cent in the fourth bi-monthly monetary policy statement.

On the back of this new development Maruti Suzuki India Chairman RC Bhargava told the PTI that the Industry was looking forward for this type of change for a long time. It is a welcome step for the entire auto industry.

Rakesh Srivastava, the Senior Vice President Sales and Marketing of Hyundai Motor India termed this step by the RBI as a "welcome festival gift by the RBI". He added that this will be seen as a welcome festival gift by RBI and the customers will appreciate it as it will support their buying. It will help create an overall multiplier effect across all segments as well as geographies.

Echoing similar sentiments, Panasonic India Head of Sales and Services Ajay Seth said that the timing cannot be better than this as it will certainly add to the festive fervour with lower interest rates is suppose to boost the increase in the rural consumption.

Nipun Singhal, the Director of Lloyd Electric and Engineering Ltd added that overall there is a positive feeling in the market after yesterday’s RBI meet, with good monsoon and implementation of the 7th Pay Commission and now the rate cut by RBI. "This will further help consumers buying more products. We expect consumers’ durables industry to grow by at least 15-20 per cent this festive season," he concluded.

Honda Cars India Limited’s Senior Vice President Marketing and Sales Jnaneswar Sen added the move will help in improving the sentiment to the next level. He said that this is a positive step that will improve the sentiment and the real impact of this rate cut will be visible when the commercial banks pass on the benefit by lowering the car loans.

Deputy Director General of SIAM, Sugato Sen hoped that banks would extend the benefit to the retail customers. He said that it is a welcome step from all aspects. The RBI governor has begun on a positive note. The move will help the industry if the banks also pass on the benefit to customers. It will help in lifting the positive sentiment further during the festive season.

The cut which is a first in six months, came amidst big clamour for easing rates especially after the departure of ex-RBI Governor Raghuram Rajan, who was often accused of stifling growth by keeping rates too high.

With the approaching festive season the rate cut by the Central Bank might be a blessing for the entire community and can open up scopes for the ones looking for car and home loans. Only time will tell how much impact this rate cut will have on the Country’s growth.

To know RBI Rate cut effect please refer to "Lukewarm welcome of RBI Rate Cut by Market"

Source: https://www.dynamiclevels.com/en/blog/rate-cut-is-a-festive-gift-says-car-consumer-durable-makers

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