Amid slowdown, lenders line up offers to turbocharge rural auto sales
festive season including lower interest rates, free insurance and longer repayment tenures.
Experts said India's auto industry is saddled with nearly '80,000 crore worth of inventory. Tractor sales, which tend to pick up after good crop yield and farm product sales, have fallen over the last two months, making lenders with growing exposure in rural markets tread with caution.
The rural areas account for a sizable chunk of sales for two-wheeler maker Hero Motocorp, and car makers Maruti Suzuki, Mahindra and Mahindra and Tata Motors, the leading sellers in these markets.
«Rural customers, for now, are looking at lower ticket size products, due to which used entry cars and tractors are seeing better traction in such upcountry markets,» said a senior executive of a south India-based finance company.
Even with the arrival of the festive season (August to October), the rural market remains under significant strain due to delayed customer purchases, poor consumer sentiment and persistent heavy rains.
«The overall monsoon story looks good, which will boost rural growth. We hope to see cash flow improving with the upcoming harvest output,» said Shripad Jadhav, president — retail agriculture and gold loans-at Kotak Mahindra Bank. «The penetration of tractors as well as passenger vehicles is still low in rural markets. With aspirations in these markets going up, we are optimistic about the future.»
Industry experts said they expect rural consumers to start buying new products from the fourth quarter of the current
