Industry body Society of Indian Automobile Manufacturers has welcomed the Reserve Bank of India's repo rate cut, saying that the availability of cheaper finance along with the onset of festive season will help generate better demand for vehicles.
RBI on Friday effected the fifth repo rate cut this year, reducing the benchmark by 25 basis points to 5.15 percent—the lowest in almost a decade.
"The reduction of repo rate by 25 basis points is a welcome move indeed by RBI. We hope that the banks would fully pass on the repo rate cut benefit to consumers in the form of lower lending rates," SIAM President Rajan Wadhera said in a statement.
The onset of festive season, along with the availability of cheaper finance, should induce higher demand for vehicles, he added.
India is the midst of a prolonged auto slowdown, what with sales falling the most on record in August this year.
The RBI rate cut is seen as boosting consumption during the ongoing festive season. This will help reduce borrowing costs for home and auto loans, which are now directly linked to this benchmark.
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