Car firms see biggest fall in sales in 16 years

New Delhi: Automobile sales witnessed their biggest monthly fall in 16 years in December as consumer sentiments dampened due to  the severe cash crunch following Prime Minister Narendra Modi's demonetisation of the Rs 500 and Rs 1,000 currency notes on November 8.

Automobile sales fell 18.66 per cent in December 2016 to 1.2 million units against 1.5 million in the same month in 2015, the biggest monthly drop since the corresponding month in 2000, according to the Society of Indian Automobile Manufacturers (SIAM).

"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," SIAM director general Vishnu Mathur said.

The sales were hit badly in rural areas and regions which are more dependent on cash transactions. Big two-wheeler manufacturers have also seen a significant impact due to their high exposure to rural markets.

The two-wheeler sales in December witnessed the steepest decline since SIAM started recording data in 1997, tanking by 22.04 per cent. Scooter sales, which are mostly urban-centric, saw the biggest decline in over 15 years, falling 26.38 per cent.

Motorcycle sales that were down by 22.5 per cent.also saw the biggest decline in eight years. "Almost half of two-wheelers sales comes from rural markets, which have been hit hard by demonetisation," Mr Mathur said.

Domestic car sales were  down 8.14 per cent, the lowest rate since April 2014 when sales declined by 10.15 per cent.  Passenger vehicle sales dipped 1.36 per cent to 2,27,824 units.