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RBI Hikes Short-term Lending & Borrowing Rates
The Society of Indian Automobile Manufacturers (SIAM) data has revealed that domestic automobile sales have been on a record breaking spree this year with the industry manufacturing 12,63,293 units in August 2010 - the highest ever achieved in a month, bettering the previous best of sales of 12,37,461 units in July this year.
But the recent increase in interest rates by banks following RBI's decision to hike key short-term lending and borrowing rates, is likely to decrease the demand in short term.
"We believe there is enough power in the economy and these rate hikes will not impact demand. Even in the short term, as the festive season is round the corner, we expect demand to continue," Society of Indian Automobile Manufacturers (SIAM) President Pawan Goenka was reported saying.
But the Reserve Bank of India raising its key short-term lending rate by 25 basis points and borrowing rate by 50 basis points with immediate effect, is expected to makes loans expensive dampening the buyer mood somehow.
Maruti Suzuki India Chief Financial Officer Ajay Seth said although interest rate hikes always had some impact on the demand side but since the rate hike is not much, there could not be any significant impact. Arvind Saxena, Hyundai Motor India Director (Marketing and Sales) however, said the rate hikes could act as a dampener to the festive season sales.
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