Tata Motors expects commercial vehicle industry sales growth to be double-digit this year despite rising interest rates on auto loans, according to a senior company official.
Supportive factors such as government investment in infrastructure, gradually increasing consumption in the country and robust growth in end-use sectors like e-commerce are outweighing headwinds such as inflation high and rising interest rates, Tata Motors chief executive Girish Wagh told PTI.
“Real demand is going to be a net driver of headwinds and tailwinds, within which inflation, interest rates remain kind of headwinds,” he said.
On the tailwind side, Wagh said government investment in infrastructure and the number of projects, the gradual increase in consumption in the country as well as end-use sectors such as e-commerce are showing robust growth. .
In addition, he said rising freight rates and fleet utilization are continuously increasing the carrier confidence index.
“It looks like tailwinds and headwinds combined should lead to good double-digit growth in the industry this year. We should expect double-digit growth in the CV industry during this year” , did he declare.
According to the Society of Indian Automobile Manufacturers (SIAM), in the first quarter of 2022-2023, domestic CV sales increased by 112% to 2,24,512 units from 1,05,800 units a year ago.
In 2021-2022, it increased by 26% to 7,16,566 units compared to 5,68,559 units in 2020-21.
When asked what impact rising interest rates on auto loans have had on demand, Wagh said, “Interest rates have a sizeable impact on a vehicle’s EMIs. .Lately, with interest rates going up no doubt, EMIs are going to go up.”
However, he said the industry had worked with financial institutions to provide such financing solutions that there was not much increase in EMIs.
“When we upgraded from BS IV to VI, and also later due to the increase in (vehicle) prices as a result of the increase in raw material prices, this resulted in an increase in the EMI of the vehicle , but we worked with financial institutions. They’ve come up with diagrams that showed that EMI remained more or less similar to what it was in the pre-BS-VI era,” said Wagh.
In August, the Reserve Bank of India (RBI) raised the key rate by 50 basis points. This is the third consecutive increase since May, effectively bringing interest rates back to pre-pandemic levels.
Asked about the outlook for Tata Motors, he said the company will remain focused on profitable growth, although it sees demand picking up in the second half of the financial year.
“We have just gone through the rainy season and now the festive season will start. So the demand will start to increase as it happens every year from the second half of August and September. This is what we expect. In fact, last year also from September, the demand increased quite nicely,” he added.
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