BUSINESS

Carmakers brace for demonetisation impact

currency jam:Demonetisation has hit the industry even as it had begun to see stability after an uncertain period.— FILE PHOTO

currency jam:Demonetisation has hit the industry even as it had begun to see stability after an uncertain period.— FILE PHOTO  

The auto industry is bracing for ‘short term headwinds’ due to ‘immediate disruption and uncertainty’ brought in by demonetisation, even as some carmakers posted double digit growth in domestic sales during November. Significantly, these figures reflect only the wholesale figures for the industry and not the retail sales reported by dealers.

While players such as Maruti, Toyota and Volkswagen saw robust growth, automakers such as Mahindra, Ford and Honda saw their sales drop during the month.

Market leader Maruti Suzuki said it sold more than 1.26 lakh units in the country last month, up 14.2 per cent from the same period last year.

Domestic sales for Toyota Kirloskar Motor (TKM) rose 10.03 per cent to 11,309 units in November. N Raja, Director & Sr. VP(Sales & Marketing) at TKM said the firm had received more than 6,200 bookings for the new Fortuner, while Innova Crysta has clocked more than 50,000 units within six months of its launch.

‘Affected walk-ins’

“However, demonetisation has had its impact on our sales as it has affected customer walk-ins at dealerships, order bookings and timely deliveries. This will pose as a major challenge in the coming days as customers are still dealing with the effects of demonetisation,” Mr. Raja added.

Likewise, domestic sales for homegrown auto major Tata Motors’ grew 22 per cent to 12,736 units, driven by strong demand for the Tata Tiago. “The limitation on cash availability due to the recent demonetisation has affected retails in the auto industry, this month,” said Mayank Pareek, President, Passenger Vehicle Business, Tata Motors.

Volkswagen India reported a more than two-fold increase in sales to 4,014 units in November, while Renault posted 23 per cent rise in sales to 9,604 units.

Mahindra & Mahindra said domestic sales in November declined 24.29 per cent to 29,814 units. “While we expected an improved auto industry performance on the back of the festive season and other positive parameters such as rural demand and interest rates softening, the sudden announcement of demonetisation has brought in disruption and uncertainty.” He added that this was significant as “the automotive industry had just started experiencing stability post a long and tough period of uncertainty,” Mr Shah said.

Similarly, Anurag Mehrotra, Executive Director (Marketing, Sales & Service) Ford India, which saw domestic sales fall 21.62 per cent to 6,876 units, said, “While the macro-economic indicators continue to be positive, the auto industry does face short-term headwinds given the recent demonetisation drive.” The sales for Honda Cars India fell 45.42 per cent to 8,029 units. Its President and CEO Yoichiro Ueno said, “Consumer sentiment was low and footfalls and enquiries at the dealerships also slowed down during the month.”

Among two-wheeler firms, India Yamaha Motor reported a 20 per cent increase in domestic sales at 51,106 units, while Honda Motorcycle and Scooter India’s sales growth was flat at 3.25 lakh units in and Royal Enfield’s domestic sales rose 39 per cent to 55,843 units.

Wholesale figures

Abdul Majeed, Partner at PwCsaid, “Demonetisation will have significant negative impact at least in the next two to three months especially (for) two-wheelers, SUVs, luxury and commercial vehicles.” He added that November sales do not reflect the ground reality of retail sales as manufacturers give out wholesale numbers.

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