The demonetisation of high value currency notes way back in November 2016 has resulted in constant drop in sales for the automotive sector, especially in December when sales dropped to a 16-year low. As per reports, around 18.66 per cent drop in auto sales was witnessed due to cash crunch and weak consumer sentiments post demonetisation.
The data released by Society of Indian Automobile Manufacturers (SIAM) indicates that automakers sold 12,21,929 vehicles in December 2016 as against 15,02,314 units in December 2015 including commercial, passenger vehicles and two and three wheelers. Light commercial vehicles have been the only segment that has witnessed a growth of 1.15 per cent. Though SIAM believes that impact of the demonetised Rs 1,000 and Rs 500 is temporary, demand for new vehicles is likely to remain weak till the new budget is announced.
As for motorcycle sales, a major share is contributed by rural areas, which has now seen a 22 per cent decline to 5,61,690 units. Unlike buyers in the city who opt for loans and cheque payments, customers in rural areas opt for cash payments. With the demonetisation issue likely to be resolved in the coming months, the automakers are likely to witness decent amount of growth in sales.
