Affordable autos in fast lane? Rate cut sparks optimism in auto sector

The Reserve Bank of India's (RBI) recent decision to slash the repo rate has sparked positive reactions from key players in the automotive industry, who anticipate a boost in consumer sentiment and sales. RBI repo rate cut, automotive industry, two-wheeler sales, entry-level cars, consumer demand, loan affordability, Sanjay Malhotra, Shailesh Chandra, C S Vigneshwar, Hyundai Motor India, Tarun Garg, rural markets, economic growth, interest rates, auto loans, vehicle financing, FADA, SIAM, HMIL, budget impact.

Industry Leaders Welcome Rate Cut

Automotive industry leaders have welcomed the RBI's decision to cut the repo rate by 25 basis points to 6.25 percent, the first such reduction since May 2020. Shailesh Chandra, President of the Society of Indian Automobile Manufacturers (SIAM), believes that the rate cut, combined with recent income tax relaxations, will positively impact the auto sector by making vehicle financing more accessible and creating a favorable market sentiment.

Impact on Two-Wheelers and Entry-Level Cars

The Federation of Automobile Dealers Associations (FADA) anticipates stronger demand in the price-sensitive two-wheeler and entry-level car segments, which have been affected by price hikes and affordability concerns. FADA President C S Vigneshwar noted that the rate cut, coupled with the Finance Minister's announcement of zero tax up to Rs 12.75 lakh, will enhance consumers' disposable income, further boosting sales in these segments.

Rural Market Growth

Hyundai Motor India Ltd (HMIL) expects the rate cut to drive demand further in the rural markets. HMIL's Tarun Garg stated that rural contribution has been a cornerstone of the company's strategy, with continuous strengthening of rural presence in high-potential locations. The company believes that the gap between rural and urban markets is shrinking, with rural customer preferences evolving rapidly