The Indian Automobile Market in Bangalore is moving at slow pace compared to the automobile markets of other prominent Indian cities. The reason for this might be the prevailing delinquency rate among those who took automobile loans in Bangalore, as a result of which, auto-finance companies are decreasing loans.
Prevailing car loan rates in the Bangalore automobile market:
Car loan rates in Bangalore have moved as high as 50 points in recent times. HDFC and Kotak Mahindra have already announced their agreement with the current loan rates. The decision of ICICI Bank in this respect is not clear as it has implemented the new rates in the other markets except the Bangalore automobile market.
Different car loan rates in the Bangalore automobile market have been set. The small-car section (Segment A cars) comes at loans with a 9.75% rate. Segment B has reached the 9.50% interest mark. Segment C and Segment D cars come at interest rates of 9.25% and 9% respectively. However, the Bangalore automobile market was positively affected by the Value Added Tax regime. Also, expensive cars which have incorporated Euro -III rules balanced the price drop in the automobile market in Bangalore.
The used-car section is helping in the betterment of the Bangalore Automobile Market. The Bangalore used-car market has recently developed a wide network of used cars. Hyundai and Ford have launched special schemes for the exchange of used cars and General Motors is soon to follow suit. The auto- finance companies as well as car owners are participating in this exchange program. The prevailing delinquency is the direct consequence of the sad condition of the IT sector which has led to the initiation of the car exchange program. Those who bought the cars by the hire-purchase method had to surrender their cars to the financing companies due to payment default and the cars acquired by lease finance are sent to the lessors for failing in car loan payments. The used -cars are now controlling the market and simultaneously restricting the fall in the Bangalore automobile market through its huge sale which often shoots up to 30 cars a month.
Bangalore is the hub of most of the manufacturing units of the Indian automobile industry. The major players in the automobile sector have their manufacturing units in Bangalore. Motor Industries Co. Ltd. for example, produces spare parts for automobiles and is located in Adugodi, Bangalore. Mysore is the manufacturing hub of the two-wheeler Yezdi. The eco-friendly and cheap electric car called Reva will be soon hitting the Bangalore automobile market from its manufacturing unit in Bangalore. TVS Motor Company already has 2 factories in Bangalore - one in Hosur and another in Mysore. They are expected to produce 500,000 vehicles on an annual basis
. The competitive car loan rates, the used car section, and the increasing importance of the Bangalore as the desired manufacturing hub of the car manufacturers are factors that are cumulatively working towards the growth of the Indian Automobile Market in Bangalore.