Interest rate softening to boost car demand: Tata Motors

The Reserve Bank of India (RBI) releases its credit policy tomorrow. What could it mean for the auto industry and what are the expectations from the auto industry.

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Ranjit Yadav, President- Passenger Car Business Unit, Tata Motors on answering a query on what he expected from RBI tomorrow he said, "If the direction which the RBI takes is towards softening of interest rates which would be seen as positive by people and would lead to improvement in demand."

Below is the edited transcript of his interview on CNBC-TV18

Q: What are your expectations from RBI's credit policy tomorrow? The markets expect a rate cut of about 25 basis points (bps). If that happens will it be enough to turnaround the sentiments in the overall passenger car business?

A: The passenger car market is very heavily driven by people buying against loan. More than the indication of 0.25 percent cut which is being talked about; it's the direction which the Reserve Bank of India (RBI) is taking. If the direction is positive and consumer sentiment goes up, it is very good for the industry.

Q: How much of a rate cut is required to reverse the trend of low growth that we have been seeing in the auto space?

A: The key thing is customer sentiment more than specific incident at this point of time. If the direction which the RBI takes is towards softening of interest rates, which would be seen as positive by people and would lead to improvement in demand.