The total number of passenger vehicles sold in May stood at 239,347 units, 20.6% lower than the corresponding month in 2018, making the decline the biggest since September 2001 when sales dropped by 21.9%.
According to data released by the Society of Indian Automobile Manufacturers (SIAM), the slump in the number of vehicles sold by manufacturers to dealers was recorded in all categories except light commercial vehicles.
Barring the month of October 2018 — a period when sales see an uptick due to festivities — May was the 11th consecutive month when sales of vehicles declined. The fall is attributed to an economic slowdown in the country as well as lenders tightening credit because of defaults in the non-banking financial company (NBFC) sector.
A new motor insurance rule that increases the cost of buying a new vehicle has also been blamed, according to Mr Vishnu Mathur, director general of SIAM. Last year, the Supreme Court ordered insurers to sell motor insurance with a term of three years for new cars and a term of five year for two wheelers.
The Federation of Automobile Dealers Associations (FADA) said last week that the move by the IRDAI to increase mandatory third party liability motor insurance premiums on various categories of vehicles, with effect from 16 June, would affect car vehicle sales. For instance, small and medium private cars with a capacity of up to 1500cc will see premium hikes of up to 12.5%.