Amid sluggish sales throughout the year 2011 continuing into 2012 and fears of the impact of hike in excise duty and service tax in the Budget 2012-13, the Indian automobile industry has set its hopes on the lowering of interest rates. General Motors India has opined that the automobile industry may not witness growth until the interest rates are lowered.
The consumer sentiments have hit the bottom in light of the rising fuel prices and car prices. According to Mr. P Balendran Director and Vice-President Corporate Affairs General Motors India, 85 percent of the total cars sold in India are financed and hence any change in interest rates has a significant impact on the car sales. He added that the industry should expect a cut back in the interest rates since they are currently at their peak levels. He went on to state that the high interest rates are a bigger hurdle than the hike in the excise duty by the government.
Mr. Lowell Paddock President and Managing Director General Motors India commented that if the interest rates attain stability, the industry may expect a rise in sales.