CHENNAI/NEW DELHI: The impact of demonetisation and the resulting cash crunch has brought demand for two of the largest auto sector segments to a grinding halt during the month of November, with sales of two wheelers falling by 6 per cent and commercial vehicles falling by 11.58 per cent compared to the same month last year.
The data, released by the Society of Indian Automobile Manufacturers on Thursday, put Passenger vehicle sales inching up 1.82 per cent, the slowest rate of growth since February this year. Passenger car sales too were nearly flat, going up to 1,73,606 units from 1,73,111 units last year.
Vehicle sales across categories registered a decline of 5.48 per cent at 15,63,665 units, from 16,54,407 in November 2015. It is the steepest decline in 43 months. Even the fast growing utility vehicle segment saw growth incongruous to what it has been witnessing for the last year, growing by just 10.01 per cent, the slowest in over 10 months.
However bad the figures might seem, SIAM officials warned that the true impact on the sector had not been captured this month. “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. He did add that since over 85 per cent of passenger vehicles are financed, people have been postponing buys.
“But the impact is visible in rural areas, especially in the two-wheeler space, where cash component pays a major role,” he pointed out. “So, two-wheeler sales are giving out a true picture of the current situation. Also, for car companies which have long waiting periods for some of their models, the impact would be less as compared to others which do not have any backlog to clear,” he added.
Mathur also pointed out that footfalls declined at showrooms during the first week after demonetisation, but situation recovered in the weeks that followed. “We expect it to be a temporary disruption and expect industry to make a comeback January,” he said.