The impact of demonetisation drive clearly showed in the automobile industry in December sales both passenger car and two-wheeler segment reported a decline in sales year-on-year.
In the passenger car segment, market leader Maruti Suzuki India sold 1.06 lakh cars during the month against 1.11 lakh units in December 2015.
In the two-wheeler segment, companies such as Hero MotoCorp and TVS Motor suffered a decline.
“While retail demand for our products was strong, our sales in December are as per our plan decided at the start of the year,” RS Kalsi, Executive Director (Marketing & Sales), Maruti Suzuki India, explained.
According to Rakesh Srivastava, Senior Vice-President, Sales and Marketing, Hyundai Motor India, demonetisation impacted consumer sentiment creating a challenge and walk-ins at showrooms were down by around 40 per cent, while overall retail sales were down by around 25 per cent immediately after the note ban.
The company’s sales during December fell by four per cent year-on-year to 40,057 units against 41,861 units in the same month previous year.
Mahindra & Mahindra’s sales also declined by eight per cent in December last year to 16,698 units compared with 18,197 units in December 2015.
“The auto industry continues to go through challenging times, grappling with the short-term effects of demonetisation as well as reduced and postponed purchase decisions,” said Pravin Shah, President & Chief Executive (Automotive) M&M.
The company expects the demand to pick-up only in the next few months, he said.
“We do hope that the implementation of GST along with some right initiatives taken by the Government in the upcoming Union Budget on February 1, will provide a veritable boost to the auto industry and the economy in general,” Shah added.
Only few companies, including Tata Motors, Toyota Kirloskar Motor and Renault India, managed to do well because of continuous new launches. For example, Toyota’s launch of Innova Crysta, followed by the new Fortuner helped the company to garner better sales during the month.
In the two-wheeler segment Hero MotoCorp’s sales fell by 34 per cent to 3.30 lakh units against around five-lakh units in December 2015. However, manufacturers like Royal Enfield and India Yamaha Motor managed to close the year successfully.
In the commercial vehicle segment also, most of the companies reported decline in sales, except M&M.
“Post demonetisation, it will take about two-three months for customer demand to return to normal in the Indian automotive industry. In order to ensure that there is no significant inventory build-up at the dealers, companies will likely offer attractive pricing and financing schemes,” said Abdul Majeed, Partner at Price Waterhouse.