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Auto makers on Wednesday welcomed RBI's move to cut key policy rate by 25 basis points but said it would translate into actual gains for vehicle buyers only when banks pass on the benefits.
"We are waiting and watching if the banks pass on the benefits of the rate cut to consumers. Earlier also when the RBI cut rates they didn't pass it on," Maruti Suzuki India Executive Director (Marketing & Sales) R S Kalsi told PTI.
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He further said: "Now that there's a total of 50 bps cut, they'll be under pressure to pass it on. We hope they do, as it would boost demand in auto sector."
Expressing similar sentiments, Bajaj Auto President (Business Development & Assurance) S Ravikumar said: "In all the rate cuts, banks can't keep swallowing benefits and keep cushioning their profits. They have to pass it on to consumers."
Terming the latest rate cut as a step in the positive direction for the overall economy, Ravikumar said: "It will help boost overall sentiments of the economy, which is very important for the auto sector, although the direct benefit of the cut will only be incremental on EMIs."
General Motors India Vice President P Balendran said the auto market is unlikely to gain much till the rates are reduced significantly.
"So far, we have seen total reduction in rates by 50 basis points (bps). I don't see the significant improvement for the auto sector unless it is reduced by 100 bps," he said.
Also calling for banks to pass on the benefits of the rate cut to consumers, Balendran said: "The banks did not reduce interest rates on loans last time too. Till the time it happens, the auto industry is unlikely to benefit."