By Express News Service

The Federation of Automobile Dealers Associations (FADA) has said that the hike in third party insurance rates effective from June 16 is set to further hit domestic automobile sales. The last few quarters have seen the Indian automobile market record consecutive months of poor sales growth, with demand taking a hit due to several factors, not least of which is a slowing down of economic growth.

“The automobile industry is already going through a difficult phase with low sales and subdued customer sentiments. This sudden change in price hike of third-party insurance will again dent the pace of sales, especially the 2W category which is already reeling under price hike for mandatory 5 years insurance and ABS/CBD implementation,” Manish Raj Singhania, secretary, FADA said in a statement.

Singhania went on to ask the IRDAI to reconsider the hike, to help effect a recovery in automobile sales. “Going forward, we would require substantial support from all quarters and especially the insurance industry to help the automobile industry to recover from the slowing demand affected by the uncertainty around NBFC and the previous regulation passed for collecting three and five years of premium for new cars and two-wheelers, respectively,” Singhania said.

FADA, however, said it welcomed the proposed 15 per cent discount on third party insurance on electric vehicles (private cars and two-wheelers) although the sales of such vehicles are very minuscule.

According to the IRDAI’s order, third party insurance rates have been increased across the board for all major automobile segments.