100-Word Take | Liquidity crunch, dampened consumer sentiment and rising insurance cost impact December car sales

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Sounak Mitra

Car sales in December dropped 3 percent from a year ago.  December is usually a healthy month for car makers when they offer additional discounts as part of stock-clearance drives.

There are three reasons for the fall.

One, a liquidity crunch in non-banking financial companies has clearly impacted credit flow to fleet owners which resulted in lower sales. Two, consumer sentiment is yet to recover from the constantly surging fuel prices during the two preceding months to December. The significant fall in fuel prices in December seems to have had no effect. Three, an increase in insurance cost might have also affected sales.