It seems that all OEMs have build up stocks in their RSOs (Regional Sales Office Yards) for tippers in particular. The bumper sale in last nine months of the financial year 2011-12 has finally started to play catch up! or is it??
With government spending on infrastructure and demand for housing not subsiding, one side of the story is that people are waiting for the interest rates to drop to start purchase of vehicles. The industry and the government is lobbying with the RBI to drop rates when it comes out with a fiscal policy decision on 15th March. Shrewdly the finance minister has kept the date for the budget on 16th March so that he still has time to make changes according to RBIs policy statement.
The other side of the story is that the tipper market has already grown by more than 60% Y-O-Y which is much higher than previous years. Hence the demand is fading away for the last quarter of the year. There is another aspect to it as well. There is a high probability that the finance minister may announce a higher excise duty for commercial vehicles (approx. 2% increase) in the budget. The government is struggling with the fiscal deficit and would want to increase its source of income for next year. It must get the deficit down. This may further dampen the sentiment though for the CV market. Hence the finance minister wants the RBI to cut rates by at least 0.5% so that the overall excise burden on the truckers is negated.
We have to wait and watch but my take is that RBI has no option but reduce interest rates specially considering that food inflation is negative for a long time now. It may go in for a lower moderation of about 0.25%. This will give a lot of food for thought to our finance minister. Lets See!
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