State Bank of India has extended credit period for automobile dealers facing slowing demand and inventory build-up to help the sector tide over one of its worst periods of slowdown.
“We are actively engaging with the auto dealers and in case of hardship faced by them the bank is extending credit repayment period on the case to case basis,” PK Gupta, SBI managing director (retail & digital banking), told reporters in Kolkata today.
Normally the credit period is of 60 days but the bank has extended the same to 75 days in some cases or 90 days in other cases, he said.
As a bank, we can only focus on the financing side, Gupta said, adding: “Our main focus is to make available funds at cheaper cost for those retail customers keen on buying cars. We also fund the dealers when they buy cars from the manufacturer. However, for the aspect of revival of demand, only government can step in.”
Gupta said there has been a slight downturn in auto loans from the bank in recent months due to various reasons.
The auto sector is facing its worst crisis in two decades and reports suggest thousands of job losses in the automobile and ancillary industry.
Around two lakh jobs have been cut across automobile dealerships in India in the last three months as vehicle retailers take the last resort of cutting manpower to tide over the impact of the unprecedented sales slump, according to the Federation of Automobile Dealers Associations.
As per Society of Indian Automobile Manufacturers figures, vehicle wholesale across all categories declined by 12.35 percent to 60,85,406 units in April-June against 69,42,742 units in same period of last year.
However, as per data based on registrations collated by Federation of Automobile Dealers Associations, automobile retail sales in the quarter ended June fell 6 percent over last year to 51,16,718 units.
Passenger vehicle segment has been the worst hit with sales declining for almost a year now. In July, market leader Maruti Suzuki India Ltd. reported a 36.3 percent drop in its domestic passenger vehicle wholesales, while Hyundai saw a dip of 10 percent.
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