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Demonetisation Impact: Automobile Sales Drop 19%, Lowest in 16 Years

Monthly automobile sales growth rate in India slipped to a 16-year-low in December with total vehicle sales declining by 18.66 per cent as demonetisation hits the industry hard.

Tushar Dhara | News18.com

Updated:January 10, 2017, 4:23 PM IST
Demonetisation Impact: Automobile Sales Drop 19%, Lowest in 16 Years
Representative image. (Photo Credit: Reuters)

New Delhi: Automobile sales in the month of December plunged to a 16-year low as demonetisation disrupted consumers demand in the economy, according to the data released by the Society of Indian Automobile Manufacturers (SIAM).

Domestic auto sales across all segments declined 18.66% in December. This is the worst decline in the automobile industry since December 2000, according to Vishnu Mathur, Director General of SIAM. Segments which were affected the most include three and two wheeler and commercial vehicles.

Two wheeler sales, a proxy for rural demand and consumers from lower income brackets, fell by 22% in December 2016 from a year ago. Three wheeler sales declined by 36% - a proxy for small goods and passenger carriers.

Commercial vehicle sales (trucks, lorries, tempos) declined by 5%, an indication that demand for vehicles to transport goods has fallen as a result of shrinking consumer demand.

"This is the highest decline across all categories since December 2000, when there was a drop of 21.81 percent in sales. The reason is largely due to the negative consumer sentiment in the market due to demonetisation," SIAM Director General Vishnu Mathur told reporters.

Mathur, however, said the drop in sales is temporary but how sales pick up would depend a lot on "how the Budget comes up with steps that will boost consumer sentiments and increase disposable income besides improving the overall economy."

Even car sales took a beating, dropping by 8.14% while van sales plunged 18.7%. The only bright spot was utility vehicles, which saw an increase of 29.94%.

It was the lowest rate since April 2014 when sales declined by 10.15 percent.

Passenger vehicle sales declined 1.36 percent to 2,27,824 units in December 2016 from 2,30,959 units in the year-ago month. The previous biggest decline in sales witnessed by the segment was in October 2014 with a drop of 7.52 percent.

Similarly, total two-wheeler sales in December also witnessed the steepest decline since SIAM started recording data in 1997. It tanked 22.04 per cent to 9,10,235 units compared with 11,67,621 units in the year-ago month.

Likewise, scooter sales, which is mostly urban-centric, also saw the biggest decline in over 15 years, falling 26.38 percent at 2,84,384 units in December 2016 as against 3,86,305 units in the year-ago month. The previous biggest decline of 27.05 per cent was recorded in March 2001.

Motorcycle sales also saw the biggest decline in eight years last month at 5,61,690 units from 7,24,795 units a year earlier, down 22.5 per cent, SIAM said. The segment witnessed the biggest drop of 23.07 per cent in December 2008.

"Almost half of two-wheelers sales comes from rural markets, which have been hit hard by demonetisation," Mathur said while explaining why the segment has suffered a big blow in December.

Sales of commercial vehicles were down 5.06 percent at 53,966 units in December 2016 as against 56,840 units in the same month in 2015, SIAM said.

| Edited by: Puja Menon
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