Demonetisation effect: December saw sharpest dip in automobile sales in 16 years

Scooters and motorcycles account for almost 75 per cent of total vehicle sales and are a significant indicator of rural demand.

By: ENS Economic Bureau | New Delhi | Updated: January 11, 2017 6:01 pm
Demonetisation, Demonetisation effect, sale dip, automobile sale dip, car purchase dip, car purchase delay, motocycle purchase delay, vehicle sale low, no sale, cash crunch, cashless economy, indian express news, india news, business news In line with the dismal sales numbers, total vehicle production, too, fell 22 per cent in December 2016, led by a 25 per cent cut in production of two-wheelers and around 20 per cent cut in production of commercial vehicles.(Representational image)

AUTOMOBILE SALES for December fell the most for a month in 16 years pointing to a possible impact of demonetisation prompting consumers to delay their purchases of cars, motorcycles and trucks.

Data released by the Society of Indian Automobile Manufacturers shows that sales of two-wheelers slid 22 per cent in December 2016 compared to the figure in December 2015, marking the highest monthly contraction since SIAM started recording the data since 1997.

Scooters and motorcycles account for almost 75 per cent of total vehicle sales and are a significant indicator of rural demand.

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In line with the dismal sales numbers, total vehicle production, too, fell 22 per cent in December 2016, led by a 25 per cent cut in production of two-wheelers and around 20 per cent cut in production of commercial vehicles.

Overall, vehicle sales slipped by 19 per cent from 15.02 lakh units in December 2015 to 12.21 lakh units last month. This is also a new low since 2000.

“Almost half of two-wheelers sales comes from rural markets, which have been hit hard by demonetisation,” said Vishnu Mathur, director general, SIAM.

Alongside the grim auto sales numbers, there was bad news from the corporate sector and the realty segment. A primary survey conducted by SBI Research between December 30 and January 3 showed that the demonetisation drive had impacted 69 per cent of businessmen in the country’s financial capital of Mumbai and the manufacturing hub of Pune.

Sectors such as construction and informal roadside trade were the worst hit by the note-ban, according to findings of the survey that covered different formal and informal business groups to ascertain the effects of demonetisation on daily business.

A total of 175 responses were recorded and analysed, of which 40 per cent respondents were from Mumbai and the remaining 60 per cent from Pune and nearby areas.

According to property consultant Knight Frank India, the housing market, too, came to a “complete standstill” during October-December 2016 quarter, with sales sliding by 44 per cent in the eight top cities, lowest level since 2010.

Housing sales in the residential segment fell to 40,936 units in eight major cities during October-December 2016, from 72,933 units in the year-ago period and 68,734 units in the previous quarter, according to the report. New home launches fell by 61 per cent to 24,316 units in the fourth quarter of 2016 compared with the year-ago period.

The Delhi-NCR market was hit hardest with sales volume dropping by 53 per cent to 6,765 units in the fourth quarter of 2016 while new launches fell by a massive 73 per cent. Knight Frank tracks the primary housing markets of eight cities — Delhi-NCR, Mumbai, Kolkata, Chennai, Bengaluru, Hyderabad, Pune and Ahmedabad.

The SIAM auto sales data for December, meanwhile, showed that while passenger vehicle sales for the month slipped by 1.4 per cent over the same month last year, three-wheeler sales fell the most by 36.23 per cent from 46,894 units in December 2015 to 29,904 units last month. The total commercial vehicle sales, too, declined by 5.1 per cent in December.

“This is the highest decline across all categories since December 2000, when there was a drop of 21.81 per cent in sales. The reason is largely due to the negative consumer sentiment in the market due to demonetisation,” said Mathur.

Domestic car sales stood at 1,58,617 units last month as against 1,72,671 units in December 2015, down 8.14 per cent. This is the biggest fall in passenger car sales since April 2014, when sales fell 10.15 per cent.

SIAM said that the number of units sold in December 2016 declined by 2.57 units from 11.67 lakh units in December 2015 to 9.1 lakh units last month. Within that, motorcycle sales declined 22.5 per cent and those of scooters by 26.4 per cent.

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