JOIN USAuto industry body SIAM on Friday welcomed the RBI's lending rate cut and said the availability of cheaper finance along with the onset of the festive season will help generate better demand for vehicles.
The remarks came as the central bank slashed its benchmark lending rate by 0.25 percentage points to 5.15 per cent.
"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," Society of Indian Automobile Manufacturers (SIAM) President Rajan Wadhera said in a statement.
The onset of festive season along with availability of cheaper finance should induce higher demand for vehicles, he added.
The automotive sector has been going through a prolonged slowdown with sales plummeting to all-time low in almost two decades in August.
The slashing of repo rate will push 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.
This is the fifth straight cut in rates by the Reserve Bank in as many policy reviews in 2019 and takes the total quantum of reductions to 1.35 per cent.