Auto Industry In Reverse Gear At The Moment As Sales Touch Five-Year Low

Auto Industry In Reverse Gear At The Moment As Sales Touch Five-Year LowRepresentative image. (Raj K Raj/Hindustan Times via Getty Images)

Rising fuel costs and higher upfront insurance costs have contributed to the lowest auto festive sales in the last five years, reports BloombergQuint.

“The entire auto industry has seen a 20 per cent year-on-year drop in overall demand during the October-November festive season. Two-wheelers and passenger cars were the worst-hit segments as customer enquiries didn’t convert into sales,” Saharsh Damani, Chief Executive Officer (CEO) of Federation of Automobile Dealers Association, an industry body.

According to the new Supreme Court ruling, customers making car purchases after 1 September will have to buy a three-year third-party insurance policy mandatorily. Also, a portion of the same will have to be upfront in the first year itself. On the other hand, two-wheelers will come with a five-year insurance policy. A percentage of Indians have the habit of not renewing their vehicle insurance policies after the first year, leading to a compromise in safety norms.

It was reported in September that car sales had fallen for the third straight month in September (2018). Not only higher fuel prices but also tragic flood situation in Kerala, inconsistent rainfall across the country and high baseline set in last year, also contributed to the muted growth.

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