“Relieved” Car Dealers – The Hindu

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Area two-wheeler and four-wheeler dealers breathed a sigh of relief following the latest High Court order to withdraw five-year “bumper-to-bumper” insurance which was previously made compulsory for vehicle registrations from the beginning of this month.

Until last month, the one-year policy meant paying a premium of around 3% of the car’s value. Dealers feared the new insurance scheme would affect sales numbers during festival season. Dealers were concerned about the increased initial cost due to driver, passenger and vehicle owner coverage, in addition to third party coverage for five years.

Now that the High Court has ruled that “the order of August 4, 2021, requiring coverage of the bumper-to-bumper policy may not be logistically and economically feasible for effective implementation in the current legal exemption. The car dealers are very relieved, said a senior official at the Ministry of Transport.

The latest ordinance stated that the previous directive would have had an unintended impact with serious repercussions on society, and that it could be withdrawn in the interest of policyholders, the automotive industry and the general public. The court’s concern to protect the interests of innocent victims should be duly taken into account in consultation with India’s Insurance Regulatory Development Authority, he said.

The main reasoning of the dealers was that selling new vehicles by bundling them with five-year insurance would not bode well for the industry just emerging from the pandemic. Indeed, the initial cost for customers could have increased in the order of 5,000 to 6,000 for two-wheelers, 50,000 for entry-level compact cars and more than 2 lakh for SUVs.

But some believe the pandemic has helped boost vehicle sales. Normal sales have not been affected for reasons related to the pandemic, according to a Tiruchi dealer. “In fact, people have become more concerned about their health and safety during the time of the pandemic. Those who could afford it but could not find a car they needed until now were now more likely to own a car to get around safely, ”he said.


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