Slowdown in commercial vehicle sales seen for India

R. Sridhar, managing director of Shriram Transport Finance Company (STFC), said that the commercial vehicle segment in India could see a marginal rise in delinquency this year. A variety of factors, including a ban on mining in Bellary, drop in freight rates, fuel price increases and higher interest rates, is slowing down sales of commercial vehicles in India. “This time around the slowdown is on account of higher interest rates, rather than excess capacity. Our customers don’t want to borrow at peak rates as the loans are fixed rate loans.” Sridhar said. He explained that the slowdown will affect both new and second hand sales. Average loan rates are going up by 100 basis points over the last year; thus, industry experts predict a deterioration in the CV financing segment. (August 6, 2011)