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Thread: Hero Honda Fears Hike In Interest Rates

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    Default Hero Honda Fears Hike In Interest Rates

    Hero Honda, World's largest two wheeler maker has said that the demand of vehicles will grow slower in the second half of 2010 as the central bank hikes the interest rates to compensate the inflation. According to the Chief Financial Officer, Ravi Sud, in the second half, demand should start tapering off. Hero Honda is planning to ramp up the production by 8.7% in fiscal year ending March 2011, which will make it achieve a target of more than 50 lakh units on scooters and motorcycles.

    Buzz up!
    Last year, the company increased the production by 23%. Hero Honda will spend 115 crore to increase the production by 3000 units a year in its Haridwar plant from January onwards.


    Inspite of the various steps taken by the govt, the measures failed to bring down the inflation from an approximate 10%. Experts feel that the growth of two-wheeler market will slow down and Hero Honda may also lose some market share as rivals add new products. Hero Honda's arch rivals Bajaj and TVS are flooding the market with new products. Newbies like Mahindra is planning to launch motorcycles in the two-wheeler sector by this year end. Hence, competition is heating up in rapid phase.

    Interest rates for automobile loans have been increasing in the recent past. For instance, SBI increased the interest rate from 11.75% to 12.25%. ICICI bank increased the price from 15.75% to 16.25%. But, the Indians are spending more to build roads connecting villages and to improve electricity, phone and health-care services which eventually means that the infrastructure investments and rising prices for farm produce are boosting rural incomes. Therefore, lot of purchasing power has come from the rural regions, said Mr. Sud.

    Source: Hero Honda | Interest Rate Hike | Automobile Loan - Oneindia Living

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    News approved.
    (Been There Done That) x 3.25

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