Likely slowdown in auto sales
Rising loan interest rates continue to impact auto sales; after Leyland, it is now car dealers who are feeling the heat:
- Interest rates for new car loans for one year has now reached levels of 17%, for 24 months at 16% and 36 months at 15%.
- The net interest rate for the customer in some cases would be lower by 3-4.5% depending on manufacturer and dealer discounts (subventions).
The fallout will be a combination of longer loan tenures, slower sales, lower manufacturer/dealer margins, etc. I imagine the real estate market will be in a similar state soon - there doesn’t seem to be much of a case for interest rates to come down anytime soon.
The auto stocks seem to anticipating this: Per Moneycontrol, the BSE Auto Index lost 1% as Tata Motors, Maurti Udyog, Bajaj Auto, M&M and TVS Motor slipped. Tata Motors especially was down almost 5%!
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