Auto industry body SIAM or Society of Indian Automobile Manufacturers president and Toyota Kirloskar vice-chairman Vikram Kirloskar believes interest rates should come down which would make auto loans cheaper. The Reserve Bank of India or RBI in a surprise move earlier this month cut rates by 0.50 per cent. However, banks are yet to pass on the benefit to consumers. Most analysts believe lenders will start cutting rates from the start of the new fiscal year starting next month.
"If the interest rates come down and I think they should come down because I like what the government is doing in trying to control the Budget and all these things. These things are very important. I'd rather have a lower Budget deficit than worry about the excise duty," Mr Kirloskar told NDTV.
The auto industry is in a much better position than it was in the last year, he said. February sales data was announced during the week which showed that car sales were up 7 per cent from last year.
"I feel the market sentiment is much better than it was last year and I feel," Mr Kirloskar said. He estimates domestic car sales to have grown around 4 per cent during the last year and is hopeful of achieving a 5-6 per cent growth in domestic car sales during the next fiscal year.
In the two-wheelers segment, SIAM expects over 10 per cent sales growth compared to 9 per cent in the year gone by.
"I prefer definitely some reduction in excise duties but a lower Budget deficit and a stronger Indian economy will make us do much better. We are more positive in the next 12 months," Mr Kirloskar said.
Finance Minister Arun Jaitley in his first full-year Budget left excise duty untouched.
Excise duty on small cars, scooters, motorcycles and commercial vehicles was reduced to 8 per cent from 12 per cent previously. For SUVs, it was cut to 24 per cent from 30 per cent; for mid-sized cars, to 20 per cent from 24 per cent and to 24 per cent for large cars from 27 per cent.
In June, the new government led by Prime Minister Narendra Modi extended the excise duty concessions by six months to December 31, 2014. The auto industry wanted further extension of the duty relaxation, but the NDA government decided against it.
Subsequently, with excise duty back to pre-February 2014 levels, auto manufacturers hiked prices of vehicles.
"I really hope the banks see the reality and do pass this cut down, it'll make a big difference in the economy of the country and definitely for the auto market," Mr Kirloskar said.
Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
