In the longer term, we expect used car prices to remain firm due to the increased demand and the lack of supply. But this higher used vehicles pricing can drive prospective customers to buy new vehicles rather than used ones due to the price difference narrowing, pent up demand stretching over years and consumer confidence returning.
Both the finance & insurance and the aftermarket parts of the auto value chain have significant headwinds in the short-term. Extension of the moratorium has put further liquidity strains on the financiers and an NPA increase is expected. For auto insurance players, there is a silver lining as claims under motor insurance are expected to come down due to a fall in kilometres being driven from total/partial lockdowns and individuals desire to social distance. However, with the claims ratio hovering around 160%, a deferment of the third party insurance rate increase by IRDA (revised yearly) and renewal rates expected to decrease, this may be a small positive.