Car-Bike Sales Drop To 16-Year Low After Demonetization  

11 Jan, 2017 14:24 IST|Sakshi
Total vehicle production fell 22 percent in December 2016, led by a 25 percent cut in production of two-wheelers and around 20 percent cut in production of commercial vehicles. (Representational image) 

New Delhi: Automobile sales in India fell 18.66 percent in December, the steepest in 16 years, hit by weak consumer sentiment and cash crunch following the demonetization in November 2016.

According to data from automobile industry body Society of Indian Automobile Manufacturers (SIAM), a total of 12,21,929 vehicles - passenger and commercial vehicles as well as two and three-wheelers - in December all over India. The drop was the steepest since December 2000, when it was 21.81 percent, said Vishnu Mathur, director-general of SIAM.

The only segment that posted an expansion in December was light commercial vehicles, which grew 1.15 percent, he added.

However, the industry is hopeful that the drop in sales would be temporary though demand would remain weak until the government announces the Budget, scheduled for February 1.

"How sales pick up would depend a lot on what steps the budget comes up with to boost consumer sentiment and to increase disposable income, while improving the overall economy," Mathur said. Sales of passenger cars in December fell 8.14 percent, the most since a 10.15 percent drop reported in April 2014, to 1,58,617 units. Overall sales of passenger vehicles dropped 1.36 percent to 2,27,824 units.

The previous biggest decline in passenger vehicle sales was in October 2014, when the drop was 7.52 percent. Sales of commercial vehicles, seen as a barometer of economic activity, fell 5 percent to 53,966 units.

In two-wheelers, volume fell 22 percent to 9,10,235 units, the sharpest fall since SIAM started recording data in 1997. While sales of motorcycles fell 22.5 percent, those of scooters dropped 26 percent.

"Almost half of two-wheelers sales comes from rural markets, which have been hit hard by demonetization," said Mathur. Whatever sales December witnessed were driven by discounts, which were the biggest ever in December, he said. "At present, there is stock inventory of almost one month in the auto industry, which will have to be cleared," Mathur said.

SIAM has not cut its sales forecast for the fiscal year yet, but the industry performance may miss the forecast if the Budget is unfavourable.

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