NEW DELHI: After losing its way for almost a year, the
car market is showing some fresh spark with heavy bookings during the past six days of the
Navratri festival, aided largely by the steps to reduce interest rate.
Carmakers say demand has spiked of late, and they are expecting even better response from buyers during Dussehra, Dhanteras and Diwali. "Bookings in the past few days have been pretty good. We have seen increased interest from customers and walk-ins have also improved, especially in north and west India.
Our fresh October bookings are more than last year as well as September this year. Going by the recent improvement, we are expecting good growth in October," says Hyundai Motor India senior VP (marketing & sales) Rakesh Srivastava. But it's actually the banks that have breathed life into the sputtering auto industry.
On Tuesday, several PSU banks, including Punjab National Bank (PNB), Oriental Bank of Commerce (OBC) and IDBI Bank, announced special offers on auto loans, marginally reducing the monthly installment for customers.
State Bank of India, one of the largest lenders in the passenger car finance business, too has reduced auto loan rates marginally, but has left its home loan rates unchanged. Private lenders like Kotak Prime, HDFC Bank and ICICI Bank are also likely to follow suit.
At present, private banks offer auto loans in the range of 11-13 % on new cars, while PSU banks charge 10.25-12 .5%. " "There's a possibility of 20 bps to 30 bps (1%=100bps) lower rates in the coming days and a decision to this effect will be taken this week," said a senior executive of Kotak Prime, preferring anonymity.
Interest rates play a big role in the car market matrix. Earlier, close to 70-72 % of customers bought cars with loans, but only 65% do so now, with the rest preferring cash purchases to high EMIs.
Car companies are hopeful that the reduction in interest rates will boost overall sentiment and increase customer footfalls in their showrooms. "The car market has been subdued for long. There's no buzz and the footfalls have been low.
Any change in interest rate would help revive customer interest during the festive season," said General Motors India vice-president (corporate affairs) P Balendran.
Top Gear
Carmakers expect even better response from buyers during Dussehra , Dhanteras & Diwali Several public sector banks have announced special offers on auto loans, reducing monthly installment for customers Private lenders like Kotak Prime, HDFC Bank and ICICI Bank are also likely to follow suit.
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