Slump in the automobile industry!

By BankBazaar | April 21, 2011

After two successive years of growth, the auto industry is now witnessing a slow down. This slow down is directly affecting auto financiers who are closely related to this industry.

The main reasons for this slowdown has been observed to be because of the increase in the amount of the loan rates along with a decrease in the sales of the vehicle which have come down to 13-14% than what it was last year of 26% for the fiscal which ended on March 2011.

Availing a car loan at this point of time will burden your finances due to the high rates of interest. During such economic situations it is best advised if you can postpone the purchase of your dream drive for quite some time now. As industry experts predict, the rate are likely to come down in the near future.

Ashok Khanna, head of auto loans at HDFC Bank, feels that the segment may bear the brunt of increase in the price of vehicles as well as rise in the interest rates. “This year is going to be a challenging year for the auto loan sector. There is already a stock pile-up with the dealers and footfalls have also come down. Compared to 30% growth last year, the automobile finance this year may grow only by 12-13 %,”Khanna said.

With headline inflation showing no signs of decline, experts believe that interest rates and prices of automobiles will only increase further, thereby laying further stress on auto finance business.

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