RBI Rate Cut To Spur Auto Demand
This move demonstrated the RBI’s confidence in the macroeconomic fundamentals and its proactive approach to supporting sustainable expansion: Anish Shah, Group CEO & MD, Mahindra Group
PUNE: Automobile industry, the barometer of the economy, has welcomed the RBI rate cut by 50 basis points to 5.5 per cent from 6 per cent, saying such reduction in repo rate would have a positive impact on the automobile sector in the country.
“Such reduction in repo rates would have a positive impact on the auto sector since it would lead to increased accessibility to finance at reduced costs, thereby creating a positive sentiment amongst the consumers in the market,” said Shailesh Chandra, President, SIAM and MD Tata Passenger Vehicles & Tata Passenger Electric Mobility.
Shradha Suri Marwah, President of the Automotive Component Manufacturers Association of India or ACMA said these measures, especially in the backdrop of persistent global headwinds, are a timely and proactive step toward stimulating domestic demand and supporting industrial growth.
“The reduction in interest rates is expected to translate into lower borrowing costs for both consumers and businesses, thereby providing a much-needed boost to the automotive sector, which has been navigating a complex macroeconomic environment,” he pointed out.
Marwah said the infusion of liquidity through the CRR cut will further ease working capital pressures, particularly for MSMEs that form the backbone of the auto component industry.
“We remain optimistic that these measures will support sustained growth, enhance consumer sentiment, and help India’s auto component manufacturing sector retain its competitiveness in the global market,” Marwah noted.
Anish Shah, Group CEO & MD, Mahindra Group said this move demonstrated the RBI’s confidence in the macroeconomic fundamentals and its proactive approach to supporting sustainable expansion. “The rate cut will serve as a positive catalyst for consumption and investment, particularly in interest-sensitive sectors such as automobiles, housing, and MSMEs. It will also ease borrowing costs, improve liquidity, and further strengthen the momentum behind India’s infrastructure and manufacturing push,” he said.
Venkatram Mamillapalle, Country CEO & MD at Renault India, said combined with a significant 100 bps reduction in the Cash Reserve Ratio (CRR), which releases Rs 2.5 lakh crore into the banking system, this policy is expected to strengthen liquidity and accelerate the transmission of lower interest rates to consumers, which will spur demand in the economy.
“For the automotive sector, this translates directly into improved access to affordable vehicle financing, especially in the entry and mid-level segments,” he pointed out.