When EMI’s Rise, Auto Loans Decrease

With the advent of rising EMI’s, the auto loan industry has seen a drastic drop in the number of car loans that have been taken out over recent months. Car buyers are being forced to postpone their decision of purchasing a car, as they just cannot afford the rates.

Many car buyers are skipping the auto loan process altogether and simply paying cash for the car they wanted, or paying cash and settling for a smaller car. ICICI Bank is one of those banks who is fully aware of the situation.

ICICI is the “king of the car loan segment” and between them and HDFC they hold more than 60% of the car loan market share. Other big companies feeling the pinch are Tata Motors, Maruti Finance, and Kotak Mahindra. ICICI has recently done more than Rs 150 in car loans, is heading the pack – but there really isn’t much business out there.

There has been some shift towards nationalized banks such as State Bank of India and State Bank of Patiala, because they have lower interest rates than some of the others. That small amount of difference will make a big difference over the life of the car loan. Because there have been quite a few delinquencies, the car loan industry is walking on eggshells when it comes to issuing loans, but they know that they have to keep pushing forward or they won’t survive.
 

Back to May Index