What Does MPC Meetings’ Outcome Spell For Consumer Durable Goods & Auto?

The Monetary Policy Committee(MPC) in its latest meeting, has decided to keep the repo rate unchanged at 6.5 per cent, whereby 5 out of 6 members voted in favour of keeping repo rates unchanged.
The industry has shown optimism for the recent development, highlighting that the unchanged interest rates will provide a sense of stability to the customers purchasing consumer goods.
The consumer durable industry said that the steady interest rates will help to lower the cost of borrowing, which will create an environment that encourages consumers to spend more, particularly on big-ticket items such as home appliances, auto and automotive. It is important to maintain a commitment to controlling inflation to protect purchasing power and make new products more accessible to consumers.

“In light of the Reserve Bank of India's decision to maintain an unchanged Repo Rate, we remain optimistic about the prospects for the auto and automotive part industry. The stability in interest rates is expected to lower borrowing costs, providing a catalyst for increased demand, particularly among new riders,” said Rajeev Kapoor, MD, Steelbird.

He further added that the thriving motorcycle and scooter market, supported by a buoyant economy, continues to present opportunities for expanding its customer base.

“The government's emphasis on road safety, coupled with potential policy measures in rural areas, further augments these prospects. Additionally, technological advancements like smart helmets are poised to resonate with tech-savvy consumers. The RBI's decision is anticipated to fuel heightened demand and drive premiumisation consequently positioning helmet manufacturers for sustained growth in the dynamic economic environment,” Kapoor added.

In another important revelation, the RBI Governor said that the inflation projection for the current fiscal year remains at 5.4 per cent and the GDP growth forecast has been upgraded to 7 per cent from 6.5 per cent.

“The unchanged interest rates are anticipated to play a pivotal role in reducing borrowing costs, thereby fostering an environment conducive to heightened consumer spending, especially on significant items like home appliances. The commitment to controlling inflation remains crucial, safeguarding purchasing power and enhancing accessibility to new products for consumers,” said Mahesh Gupta, CMD, Kent RO Systems. 

Gupta further mentioned that the adjusted GDP growth expectation, now projected from 6.5 to 7 per cent in FY 24, aligns well with the industry's aspirations.

“A robust economy, coupled with stable interest rates, holds the promise of elevating disposable incomes and bolstering consumer confidence. The targeted focus on rural and semi-urban areas through policy measures takes on renewed significance, potentially unlocking untapped markets and spurring demand for consumer durables in the evolving economic scenario,” he added.