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Auto Sector Under Pressure: Pranabh Mukherjee
The finance minister said: “The observed deceleration in growth in automobile and real estate sector also owes to higher prices arising from the market conditions." The Reserve Bank of India (RBI) has increased lending rates to control increasing inflation. Car makers have recently increased prices due to increased input costs. Both of these have had a negative impact on car sales.
A large chunk of car buyers buy cars by taking car loans and loans are getting costlier by the day. Several carmakers are offering lower interest rates through their own finance divisions to counter dwindling sales. But the increasing fuel prices have resulted in another dampener for car sales. Car makers are under increased pressure to build more and more diesel cars as car buyers have now shifted their preference to diesel cars. The difference in price between petrol and diesel has increased significantly this year.
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