Rate relief cheered: Auto industry backs RBI’s 50 bps repo cut; expects boost in affordability, retail demand

India’s automobile sector has welcomed the Reserve Bank of India’s latest rate-cut move, calling it a timely intervention that could improve financing access, strengthen consumer sentiment, and support overall retail growth.On Friday, the RBI reduced the repo rate by 50 basis points to 5.5% and cut the Cash Reserve Ratio (CRR) by 100 basis points to 3%. The CRR reduction will be implemented in four tranches of 25 basis points each, starting September 6, and is expected to infuse liquidity of Rs 2.5 lakh crore into the banking system.According to ANI, Shailesh Chandra, President of SIAM and Managing Director of Tata Passenger Vehicles Ltd & Tata Passenger Electric Mobility Ltd, welcomed the move. “Such a reduction in repo rates would have a positive impact on the auto sector since it would lead to increased accessibility to finance at reduced costs, thereby creating a positive sentiment amongst the consumers in the market,” he said.Anish Shah, Group CEO and Managing Director of Mahindra Group, also endorsed the RBI’s decision. “This move demonstrates the RBI’s confidence in the macroeconomic fundamentals and its proactive approach to supporting sustainable expansion,” he said. “The rate cut will serve as a positive catalyst for consumption and investment, particularly in interest-sensitive sectors such as automobiles, housing, and MSMEs.”Echoing similar views, Venkatram Mamillapalle, Country CEO & Managing Director of Renault India, said the move comes at the right time and will support consumer affordability. “This policy is expected to strengthen liquidity and accelerate the transmission of lower interest rates to consumers, which will spur demand in the economy,” he said. “For the automotive sector, this translates directly into improved access to affordable vehicle financing, especially in the entry and mid-level segments.”He added that he remains optimistic about growth in the auto industry for FY 2025–26, supported by strong macroeconomic indicators and evolving consumer confidence. “The RBI’s proactive measures are poised to spur automotive retail, enhance customer affordability, and strengthen the economic cycle,” he said.The Federation of Automobile Dealers Associations (FADA) reported a 5% year-on-year rise in vehicle retail sales for May. However, the body cautioned that global supply chain issues — from rare-earth shortages affecting EV production to broader geopolitical tensions — may continue to influence urban consumer sentiment.FADA noted that the RBI’s latest rate and CRR cuts would serve as a “major boost” to the sector.