Following the increase announced by the RBI in repo rate and reverse repo rate, the auto loans are set to go for another hike in the country. The first hike for 2010 was announced in January by automakers to help stretch margins against the rising input costs, second followed by the union budget which took back the 2% excise duty on cars. In fact, recently banks like HDFC and Kotak Mahindra had announced a hike in their auto loan rates by 50-75 bps.

Analysts believe that the collective impact that these hikes will made will range in the tune of Rs. 5,000 to Rs. 50,000 depending upon the car model. However, experts are also of a view that the sales momentum that the auto industry is enjoying currently may not hit a roadblock in the short run. But as the April 1 deadline for BSIV comes near, the industry will witness another round of hikes.

Clearly, these hikes will have a long term impact on the Indian automotive sector but the coming two months arte expected to take the sales momentum forward. Coupled with a dozen new launches and low base effect, automakers are ready to keep the flag flying high.