The cash crunch following demonetisation of old Rs.500 and Rs.1,000 notes has hit the auto sector, with sales in November being impacted across all segments.
While passenger vehicle sales in the country grew by 1.82 per cent in November, the lowest rate since February this year, sales of two-wheelers fell by almost 6 per cent, and commercial vehicle sales were down close to 12 per cent, as per the data released by Society of Indian Automobile Manufacturers (SIAM), on Thursday.
The total vehicle sales across categories has seen a decline of 5.48 per cent at 15.63 lakh units during the month. It is the steepest decline in 43 months.
“In November, companies were able to push stock to dealers as the inventory levels were down owing to a good festive season in October. So, the impact is not visible at wholesale levels. It will be only clear after this month after taking into account retail sales,” SIAM Director General Vishnu Mathur said.
‘Temporary phenomenon’
Asked if the industry body would revise its growth estimates for the year, Mr. Mathur said, “There is no slowdown. This is a temporary phenomenon. People are just postponing purchases due to shortage of cash…We expect things to normalise January onwards, if things settle down.”
More than 80 per cent of the cost of passenger vehicles is financed.
“So, the impact is more prominent in rural areas where cash buys are more,” Mr. Mathur said. Hence, two-wheeler sales present the correct picture of the current situation.
He added that car companies had seen a decline in footfalls at showrooms in the first week after demonetisation, but they recovered in the weeks that followed.
Flat growth
Passenger vehicle (includes cars and utility vehicles) sales in November stood at more than 2.40 lakh units, compared to more than 2.36 lakh in the same period last year.
While sales of cars remained almost flat at more than 1.73 lakh units, utility vehicles grew at the slowest pace in the past 10 months of 10 per cent to 53,800 units. Commercial vehicle sales stood at 45,773 units, down from 51,766 units in November 2015. Total two-wheeler sales in November clocked more than 12.43 lakh units compared with more than 13.20 lakh units in the same month last year.
While motorcycle sales declined by 10.21 per cent to about 7.78 lakh units, scooter sales were down 1.85 per cent to more than 3.88 lakh units.
‘Significant impact’
Sridhar V, Partner, Grant Thornton India commented, “Demonetisation has had a significant impact in the November sales across all segments of vehicles. But is that the bottom, one can’t say; the performance over the next couple of months would reveal the actual impact. The expected rate cut also did not happen and could prolong the pain for the short-term.”
In the April-November period, however, total vehicle sales across categories grew 12.5 per cent to 1.54 crore units as against 1.37 crore in the same period last year.
