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News Brief | November 2011

India's auto finance industry may double in 5 yrs

India's auto finance industry is estimated at Rs 60,200 crore for FY2011. In the last five-year period, the auto finance industry has grown at the rate of 13 per cent. The auto finance industry has consolidated over the past few years as some firms exited the industry and the largest company slowed down post the financial crisis of 2008.

The auto industry (passenger cars and multi-utility vehicles) has been a leading indicator of the growth of Indian economy. It has been growing at a rate of 16 per cent for the past five years, roughly twice the rate of our GDP (gross domestic product) growth. It is expected that the industry is to double in five years on the back of growing aspirations of the current set of manufacturers as well as the continued inflow of global players.

Keeping the present condition of India's economic growth in mind analysts assume that overall auto sales will double in the next five years. They expect that India's auto finance industry is also set to ride a growth trajectory that is unparalleled in the domestic or international market.

Diesel vehicles, though being more expensive, have been doing well, which suggest that customers are willing to pay higher upfront prices if they see lower running costs.

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