Rising car prices: In tough times, used looks better

Sep 16 2013, 08:23 IST
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As the economy navigates a slowdown, consumers are moving away from the fancied car market and in the five-month period between April and August of the current financial year. (Reuters) As the economy navigates a slowdown, consumers are moving away from the fancied car market and in the five-month period between April and August of the current financial year. (Reuters)
SummaryProspective buyers are increasingly favouring used cars that have seen rising sales

per cent as against its average growth in the recent past of about 15 per cent. Excerpts:

How do you see the stress on your auto loan business?

Our growth is linked to the industry and while the growth of industry has declined we cannot continue to do well. The overall growth has suffered with decline in sales. We are working on strategies to maintain growth. While we were growing at over 15 per cent earlier, we now hope to grow by 4-5 per cent that too after putting in three times the effort. This is also leading a rise in our costs.

How long do you think would the current environment prevail?

Growth is going to be tough and pain will continue for at least one year and may extend to two years. If 2008 was bad, this is worse on all aspects. The current situation is more a self created one and even as the United States is coming out of recession, we are in problem.

How do you see the rupee depreciation impacting the industry?

With the value of rupee depreciating, the imports have become costlier for the manufacturers making their input costs higher. I see the prices of cars going up by atleast 10 per cent over the next one year.

How have you seen the behaviour of buyers changing?

With significant rise in prices of various cars, sales are getting affected and buyers are shifting towards cheaper options within the segment and that is happening in various cases.

What are the reasons for this decline?

While manufacturers put the blame on financiers, I donít buy that argument as 10.5-11 per cent rate of interest is not a very high rate that can deter the buyer from buying the product.

While the broader slowdown and decline in sentiments has impacted auto sales, I think the manufacturers themselves too are responsible for the same to some extent as they have raised their prices significantly over the last few years.

Every year in anticipation of the Budget, they raise the prices and every time there is dip in sales, they would raise the prices and the prices stand to high levels as of now.

What measures can help revive the industry?

Auto industry is the barometer of the economy and an overall revival is required. The governmentís increase in spending will be important. While the customer is bearing all the brunt ó higher interest rates, higher cost of cars, higher

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