HYDERABAD: This festive season the automobile industries’ hopes of seeing a boom in their sales should not be so high. Two new pronouncements this year with respect to vehicle insurance is making the customers think twice before going for the new car or bike. After the Supreme Court increased the period of third party cover from 1 - 5 years, effective September 1, came the Insurance Regulatory and Development Authority’s (IRDA) decision to increase the personal accident cover from `1 lakh to `15 lakh, effective October 3. Both the announcements are going to invariably hike the ownership price for a vehicle.
Compared to last year’s sales, Ramakrishna Reddy, Managing Director of Ramcor TVS, said, “Last year this time, we had sold easily over 400 vehicles in the month. We have given many incentives but with the rise in petrol prices and insurance rates has reduced the enthusiasm among customers.”
Insurance cover before September was approximately around `1,600 - `1,800 ( 3-4%) depending on the vehicle, increasing to almost `9,500 (18-19%) post-October. This is bound to increases the ownership cost of the vehicle by at least 25% according to a research conducted by CRISIL.
“We do have customers who look at models and ask about the bike prices. Though not as frequent as last time, sales is moving. Most of our old customers come over and prefer giving their old vehicles for complete servicing rather than purchasing a new one.
We’ve got more than 80 service calls since the insurance hike,” said an executive at a Hero Honda showroom’s service center. Looking at many of the automobile showrooms in the city, like Kawasaki, Hero Honda and TVS, a few of the incentives offered are similar. Incentives include free one-year insurance, silver coin on every purchase, low down payment and warranties among other schemes and discounts.