Vehicle loans outstanding rose 22% year-on-year to Rs 5.09 lakh crore in May, despite the Reserve Bank of India's (RBI) rate hike spree in 2022-23. 

As per the latest RBI data, the total vehicle loan outstanding climbed from Rs 3.65 lakh crore in May 2021 to Rs 4.16 lakh crore in May 2022, and further to Rs 5.09 lakh crore as of 19 May 2023.

The annual rise in loan outstanding was only 14% in May 2022.

Since May 2022, the RBI started raising the interest rate to check rising inflation in the wake of the Russia-Ukraine war. The repo rate (benchmark interest rate) rose by 250 basis points in six tranches, before the RBI pressed the pause button at the beginning of the current fiscal.

The retail sales data collected by the Federation of Automobile Dealers Associations (FADA) also reflects rising sales of vehicles across various categories in June.

According to FADA, the auto retail sales in June demonstrated a 10% year-on-year growth, encompassing positive performances across various vehicle categories, including 2-wheelers, 3-wheelers, passenger vehicles, tractors and commercial vehicles.