Array

Research

Rising fuel, finance cost pushes vehicle ownership cost by 6-7% in a year

| September 26 2018 17 : 48 IST | Business Standard

Led by good economic growth, benign interest rates and new model launches, automobile sales across segments have been advancing at a brisk annual pace for six years. The 2017-18 fiscal year saw a record sales of 24.9 million vehicles, according to the Society of Indian Automobile Manufacturers.

The cost of owning a personal vehicle is estimated to have risen by six to seven per cent over a year, the highest since 2010-11. The main reasons being rising fuel prices, increase in finance, insurance and vehicle registration cost.

Even so, sales demand is expected to stay strong, say officials at automobile companies. The peak season is about to begin, with Navratra, followed by Dussehra and Diwali.

Led by good economic growth, benign interest rates and new model launches, automobile sales across segments have been advancing at a brisk annual pace for six years. The 2017-18 fiscal year saw a record sales of 24.9 million vehicles, according to the Society of Indian Automobile Manufacturers.

As for the six-seven per cent rise in total ownership cost of passenger vehicles (PVs), this is an estimate issued on Wednesday by IIFL Institutional Equities. The recent Supreme Court order to compel long-term third-party insurance has further increased upfront purchase cost. IIFL adds that borrowing rates on automobile loans are on the way up.

“Our forecasts build in 11 per cent volume growth for PVs and 14.5 per cent for two-wheelers in FY19. Given the strong start to the year, these forecasts might not be under severe risk,” wrote Joseph George and Suraj Chheda, analysts at IIFL.

Source: https://www.business-standard.com/article/companies/rising-fuel-finance-cost-pushes-vehicle-ownership-cost-by-6-7-in-a-year-118091300031_1.html

    Media Kit

    IIFL, serving more than 3.5 million customers

    Looking for a product?

    Submit