RBI's latest hike

Consumer finance will get more expensive and companies will pass on the burden of high input costs to 'you', the customer.

A marketing director, V Ramachandran says, "We have passed on the high input costs to the consumer. In the last one month, we have already increased the prices of our products by 4 per cent to 6 per cent but this is still not fully compensating us. Increase in overheads are yet to be compensated."

Consumer durables getting dearer is one side of the coin. The other side is getting these products financed. Approximately 15-17 per cent people use consumer loans to buy home appliances like TVs, refrigerators and air conditioners.

COO Haier Appliances India, Pranay Dhabai says, "Another hike in interst rates now will play spoilsport as input costs have gone up by 18-20 per cent over the last few months. We will have to increase the prices. In addition to this loans getting expensive will make the situation worse."

LG gets 20-25 per cent of its sales through retail finance, Samsung and Haier around 20 per cent and Whirlpool also sees around 10-12 per cent of the appliances sold through finance companies.

Any increase in interest rates will surely hit the consumers who opt for loan schemes to buy consumer durable products and with banks like ICICI, Citi Financial and GE Money closing their shutters for retail sales finance, the situation is even more glum.

V Ramachandran says, "A part of durable purchase is done through loans. We get around 20 per cent of our business from consumer finance. But now, banks are under pressure and they will pass on the interest rate hike burden to the consumers. This will hit the buying capacity of the people who have fixed income."

The only hope left now is the festive season starting October which may come with some offers to attract the customers.