Two Wheeler Auto Loan Industry Suffering

As with cars, the two wheeler auto loan industry has been feeling the pinch of interest rates. According to a recent report, sales of two-wheelers have dropped drastically. Over the past five years, the industry has seen a 16-18% increase each year. This past year it only increased by 11%.

Hero Honda is the industry leader in car loans and sales, and they saw a 4.9% increase in April of this year over April of last year. Bajaj Auto and TVS Motors both decreased, and motorcycle sales dropped by 34%.

Some in the industry are not concerned, as they say auto loans fluctuate, and they could see them turnaround in the next five months. They also say that it has been hard because those that buy two wheelers are not really the wealthy people. They say that these middle and lower class purchasers got into financial problems and stopped paying on their loans. They say defaults on auto loans have increased.

Experts say that this is temporary and that when inflation is low and finance is easily available, their sales will increase by at least 10%. However, right now the banks want 15% and many people cannot afford to put that much forward on a car loan. They say that if they can they will ride this wave and they will be back in the black before they know it.

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