Higher interest rates hurting car buyers' sentiment, hints SIAM
- Higher interest rates for vehicle loans, along with hikes in long-term insurance premiums, are concerns for vehicle buyers, hints SIAM.
The Society of Indian Automobile Manufacturers (SIAM) has just published the vehicle sales data for November 2022. The data shows that the passenger vehicle segment has posted its highest-ever sales in the current financial year till November, with 276,231 units sold. However, there are concerns bothering vehicle buyers and the auto industry as well. The higher interest rates for car loans imposed by the banks and other lending players, along with the increased amount of long-term insurance premiums by the regulatory authorities, are posing threats ahead of vehicle sales, hinted the country's apex automobile governing body.
Rajesh Menon, Director General of SIAM, has said that higher interest rates and increases in long-term insurance premiums continue to be a concern for consumers. Vinod Aggarwal, President of SIAM, has said that the automotive sales uptick in November this year was because of the positive consumer and business sentiment. The lowered number of Covid-19 cases and increased business and economic activities have helped automotive sales in India to grow significantly over the past few months. However, SIAM also hinted that the repo rate hike by RBI, which is expected to result in a hike of the vehicle loan interest rates, would hurt the growth trajectory. Apart from that, vehicle insurance premiums too have been increasing multifold, posing a hurdle for auto sales.
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Reserve Bank of India has increased the repo rate multiple times this year, impacting the vehicle loan interest rates. The insurance regulatory authority IRDAI too increased the insurance amount of vehicles, impacting the premium amounts for that. Earlier this year, the insurance amount for vehicles was hiked in June. Meanwhile, last week the Insurance Regulatory and Development Authority of India (IRDAI) proposed a long-term strategy covering third-party insurance and own damage insurance. This would allow the general insurance companies to offer a three-year policy for cars and a five-year policy for two-wheelers.