Automobile dealers ‘relieved’

Dealers of two-wheelers and four-wheelers in the region have heaved a sigh of relief over the latest High Court order on withdrawal of the five-year ‘bumper-to-bumper’ insurance that was earlier made mandatory for vehicle registrations with effect from the start of this month.

Till last month, the one-year policy had meant payment of premium of around three % of the car value. There were concerns among the dealers that the new insurance plan would impact the sales figures during the festival season. The dealers were worried about the increase in upfront cost on account of coverage of the driver, passengers and owner of the vehicle, besides the third-party cover for five-years.

Now that the High Court has ruled that ‘the order dated August 4, 2021, mandating the coverage of bumper to bumper policy may not be logistically and economically feasible for effective implementation in the present legal dispensation,” the automobile dealers are a relieved lot, a senior Transport department official said.

The latest order said that the earlier directive would have caused unintended impact resulting in severe repurcussions on the society, and it may be withdrawn in the interests of policy holders, automobile industry and public at large. The anxiety of the court to protect interest of innocent victims must be duly taken care of in consultation with Insurance Regulatory Development Authority of India, it said.

The main reasoning of dealers was that selling of new vehicles by bundling it with five-year insurance will not augur well for the industry that was just coming out of the pandemic. For, the upfront cost for customers could have increased in the range of ₹ 5000 to 6000 for two-wheelers, ₹ 50,000 for entry level compact cars, and by more than ₹ 2 lakh for SUVs.

But some opine that the pandemic has helped in scaling up vehicle sales. According to a dealer in Tiruchi, normal sales was not affected due to pandemic-infused reasons. ‘Actually, people have become more health and safety-conscious during the pandemic period. Those who could afford but did not find car necessary hitherto were now more inclined to own cars to move about safely,’ he claimed.