Increase in repo rate will put ‘brake’ on growth of auto industry: FADA

New Delhi, May 4 (PTI) Auto dealers’ body FADA on Wednesday said the hike in the repo rate will put a “brake to some extent” on the growth of the auto industry and the two-wheeler sector, which is already going through a slowdown, will be affected.

The Reserve Bank of India (RBI) on Wednesday increased the repo rate by 0.40 percent. This decision will also affect the monthly installments of other loans including housing, vehicle.

Federation of Automobile Dealers Association (FADA) President Vinkesh Gulati said in a statement, “The RBI’s move to hike the repo rate by 0.40 per cent has clearly shocked everyone. This move will curb excess cash and make vehicle loans costlier.

He said the passenger vehicle segment could bear this blow due to the long waiting period but the two wheeler segment would not be able to bear another blow of higher vehicle loan cost.

Gulati said the two-wheeler sector is already badly hit due to poor performance in the rural market, hike in vehicle prices and high fuel cost.

According to FADA, two-wheeler sales declined by four per cent to 11,57,681 units in March 2022 from 12,06,191 units in the same month last year.