RBI Rate Cut to Positively Impact Auto Sector, Says SIAM President

The automotive sector of India will expand according to forecasts after the Reserve Bank of India (RBI) decreased the repo rate by 25 basis points to 6% for its second successive reduction after February. The rate-cut decision emerged from decreasing inflation and declining oil costs to establish a new minimum borrowing cost since November 2022.

The Society of Indian Automobile Manufacturers (SIAM) approved the decision since it decreased vehicle finance expenses while boosting consumer confidence, which drives automobile sales. The car purchasing process depends heavily on affordable credit and the current rate cut presents itself at just the right time to benefit the sector.

SIAM President Shailesh Chandra, who also heads Tata Passenger Vehicles Ltd and Tata Passenger Electric Mobility Ltd, emphasized the impact of the decision, stating, "It will increase accessibility by reducing the financing costs, thereby creating a positive sentiment across the market."

The automotive passenger and electric vehicle industry stands to benefit from reduced loans costs as part of the repo rate decrease thus compelling retail buyers along with fleet operators to increase their purchasing activity. This industry growth trajectory will gain momentum because the rate reduction supports the sector during its recovery from earlier market declines and prepares for sustainable expansion.