Auto sales skid with notes ban in Nov

The automobile industry has been among the worst hit by the Centre’s demonetisation drive.

The sector, which had picked up a bit after the festival season sales in September and October, skidded in November, according to a report from the Society of Indian Automobile Manufacturers (SIAM).

For example, in the passenger cars segment, June had seen the lowest sales (-5.18 per cent) at 1.54 lakh units. In November, it reported almost flat year-on-year sales at 1.73 lakh units.

Similarly, for passenger vehicles, while the lowest sales were in February (1.31 per cent rise) at 2.24 lakh units, the November numbers stood at an uninspiring 2.41 lakh units.

But, in the two-wheeler segment, the decline has come after a long gap. For example, the scooter segment, which saw a 3.18 per cent fall in March 2013 at around 2.50 lakh units, has again seen a year-on-year decline of about 2 per cent to a little above 3.88 lakh units in November 2016 (versus 3.96 lakh units in November 2015).

Even the number one scooter maker Honda Motorcycle & Scooter India saw its scooter sales decline 2.27 per cent to 2.03 lakh units during the month, compared with around 2.08 lakh units in November 2015.

Motorcycle sales, which had last reported a sales decline (-6.5 per cent) in December 2015 at around 7.25 lakh units, has declined by more than 10 per cent this November to 7.78 lakh units (against 8.67 lakh units in the same month last year).

The three-wheeler segment also saw a 26 per cent decline in sales to 33,662 units (45,425 units). The last time three-wheelers saw a decline in sales was in October 2015 with 52,375 units, as per SIAM records.

In the overall commercial vehicles segment, the last decline was in September this year at 1.95 per cent, which has gone up (-12 per cent) in November with 45,773 units, against 51,766 units in November last year.

Remains positive However, SIAM remains positive about the industry in the long run. “To some extent demonetisation has impacted (sales) but there is still demand and demand will not reduce. We are expected to make up in March-April as we expect some reduction in interest rates in January,” said the organisation’s Director General Vishnu Mathur.

In November, companies were able to push stock to dealers as the inventory levels were down owing to a good festival season in October. So, the impact is not visible at wholesale levels. It will be clear only after this month, after taking into account retail sales, he said.

Over 85 per cent of the passenger vehicles are financed, so people are just postponing buys while the demonetisation impact is visible in rural areas, especially in the two-wheeler space, where the cash component plays a major role, he added.

COMMENT NOW