Rate Cut To Positively Impact Auto Sector

New Delhi: The decision of the Reserve Bank to cut policy rate by 50 basis points will have a positive impact on the automobile sector as it will make loans cheaper, industry body SIAM said on Friday.

The RBI on Friday cut repo rate by a higher-than-expected 50 basis points to prop up growth, which has slowed to a four-year low of 6.5 per cent in FY25. Following the rate cut, the key policy rate eased to a three-year low of 5.5 per cent, providing relief to home, auto and corporate loan borrowers. "Such reduction in repo rates would have a positive impact on the auto sector since it would lead to increased accessibility to finance at reduced costs, thereby creating a positive sentiment amongst the consumers in the market," the Society of Indian Automobile Manufacturers (SIAM) President Shailesh Chandra said in a statement.

The Automotive Component Manufacturers Association of India (ACMA) said the RBI's decision to reduce the repo rate by 50 basis points and to ease the Cash Reserve Ratio is a timely and proactive step toward stimulating domestic demand and supporting industrial growth, especially in the backdrop of persistent global headwinds.