Automobile leader Maruti Suzuki India said that though the consumer demand was still very high, the absolute lack of financing options has pushed the industry into a reverse gear.
“On a year-on-year basis, enquiries at our showrooms have grown by 38 per cent but a bigger drop in finance approvals is hurting us,” said Mayank Pareek, executive officer, marketing and sales, Maruti Suzuki India. “Earlier 60-65 per cent of loans would be approved but that number has come down drastically to just 20 per cent now.”
Interest rates for car loans have gone up from 7.5-8 per cent to over 14 per cent in the last two years. Despite the 1 per cent repo rate cut last week, none of the major banks have announced a cut in rates yet.
“Depressed market sentiment has grown in Q2 from what it was in Q1,” said Shinzo Nakanishi, managing director, Maruti Suzuki India. “Business is tough for everybody.”
Operating on a large base, demand for existing models in the small car segment have slid in the July-September period of this fiscal. Small car sales have declined by 0.8 per cent, while Maruti which has a majority 57 per cent share in the segment, saw its sales slide by 3.8 per cent.
“This is a tough year and small car sales have been hit because 60-65 per cent of our customers are first time buyers who are deferring their purchases,” Pareek said. “The percentage of cars being financed has also gone down from 84-86 per cent two years back to just 74 per cent now.”