InvestorQ : Will customers be able to get loans to buy cars? Then how will auto demand pick up?
Aashna Tripathi made post

Will customers be able to get loans to buy cars? Then how will auto demand pick up?

Answer
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Tisha Malhotra answered.
4 months ago


Not just auto customers but even dealers will also find it tough to borrow from banks and NBFCs as defaults could increase significantly after the loan moratorium is lifted. Most of the auto NBFCs placed in red zones like Mumbai, Delhi and Pune are yet to function at full strength. This is restricting smooth operations. Lending has become even more stringent considering the extension of moratorium to six months now. Dealers need funding to hold inventory in their showrooms and for short-term working capital requirements including buying vehicles from manufacturers. The 70-day lockdown has led dealerships in red zones to bear the complete 2.5 months inventory and will keep piling on even after the lockdown lifts. Even showrooms and dealerships located in orange zones have hardly seen any traction in the last few weeks. It is anticipated that the sales of passenger vehicles could also decline 24% to 26% in fiscal 2021. Bank diffidence will only add to the problem.