Auto sales dip to 16-year low in December as note ban takes toll

New Delhi: One more sector which bore the brunt of demonetisation is Automobile sales.

As per the news agency PTI, the monthly automobile sales growth rate in India slipped to a 16-year-low in December with total vehicle sales declining by 18.66 percent as demonetisation hits the industry hard.

PTI, quoting the latest SIAM data said that most of the major segments, including scooters, motorcycles and cars, witnessed record decline December sales as the automobile sector continued to bear the brunt of negative consumer sentiments in the wake of the ban of Rs 500 and Rs 1,000 banknotes announced in November.

Vehicle sales across categories registered a decline of 18.66 percent last month at 12,21,929 units, from 15,02,314 units in December 2015, as per 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 percent in sales. The reason is largely due to the negative consumer sentiment in the market due to demonetisation," SIAM Director General Vishnu Mathur told reporters here.

Except for the light commercial vehicles segment, which saw a growth of 1.15 percent at 31,178 units, all the other categories of the industry saw decline in sales in December, he added.

Mathur, however, said the drop in sales is temporary but how sales pick up would depend a lot on "how the Bugdet comes up with steps that will boost consumer sentiments and increase disposable income besides improving the overall economy."

Domestic car sales were at 1,58,617 units last month as against 1,72,671 units in December 2015, down 8.14 percent. It was the lowest rate since April 2014 when sales declined by 10.15 percent.

Passenger vehicle sales declined 1.36 percent to 2,27,824 units in December 2016 from 2,30,959 units in the year-ago month. The previous biggest decline in sales witnessed by the segment was in October 2014 with a drop of 7.52 percent.

Similarly, total two-wheeler sales in December also witnessed the steepest decline since SIAM started recording data in 1997. It tanked 22.04 per cent to 9,10,235 units compared with 11,67,621 units in the year-ago month.

Likewise, scooter sales, which is mostly urban-centric, also saw the biggest decline in over 15 years, falling 26.38 percent at 2,84,384 units in December 2016 as against 3,86,305 units in the year-ago month. The previous biggest decline of 27.05 percent was recorded in March 2001.

Motorcycle sales also saw the biggest decline in eight years last month at 5,61,690 units from 7,24,795 units a year earlier, down 22.5 percent, SIAM said. The segment witnessed biggest drop of 23.07 percent in December 2008.

"Almost half of two-wheelers sales comes from rural markets, which have been hit hard by demonetisation," Mathur said while explaining why the segment has suffered a big blow in December.

Sales of commercial vehicles were down 5.06 percent at 53,966 units in December 2016 as against 56,840 units in the same month in 2015, PTI said quoting SIAM data.

Mathur said whatever sales December witnessed were "driven by the largest discounts ever that the industry has seen."

He further said that moderation in sales in the auto industry is expected to continue this month as well as consumers defer purchases on Budget expectations.

"At present, there is stock inventory of almost one month in the auto industry, which will have to be cleared," he added.

When asked if SIAM would revise its growth forecast for the ongoing fiscal for passenger vehicles, considering the drop in sales in November and December, he said the industry body hasn't looked at the matter yet.

"However, with the way things are going and if the Budget doesn't bring big steps to boost consumer sentiments, we may miss our forecast," Mathur said.

Last September, SIAM had revised upward its growth estimate for passenger vehicles for the ongoing fiscal to 10-12 per cent. The segment was originally pegged to grow at 11-13 percent but was later revised downward to 6-8 percent.

Mathur said that the auto industry hasn't yet benefited from a good monsoon and 7th Pay Commission payouts and a lot would depend on the Budget going forward.

According to SIAM data, in the cars segment, market leader Maruti Suzuki India saw its domestic sales decline by 10.93 percent in December at 81,092 units as against 91,043 units in the same month a year ago.

Similarly, rival Hyundai Motor India also witnessed a decline of 10.95 percent at 33,037 units last month as against 37,101 units in December 2015.

Tata Motors, however, posted a jump of 39.59 percent at 9,632 units as compared with 6,900 units in December 2015.

In the motorcycles segment, market leader Hero MotoCorp saw its sales dip by 28.98 percent to 2,79,448 units last month as against 3,93,495 units in December 2015.

Homegrown rival Bajaj Auto also saw a decline of 11.35 per cent at 1,06,665 units as against 1,20,322 in the year-ago month.

However, Royal Enfield posted a growth of 40.65 percent at 56,316 units last month as compared with 40,037 units in December 2015, thus becoming the third biggest motorcycle seller in the month overtaking Honda Motorcycle and Scooter India (HMSI) which posted sales of 53,400 units as against 92,280 in the same month in 2015, down 42.13 per cent.

In the scooters segment, market leader HMSI posted sales of 1,51,758 units last month as against 1,98,260 units in December 2015, down 23.45 percent.

Chennai-based TVS Motor Co saw its scooter sales dip by 16.17 percent at 52,116 units as against 62,173 units in December 2015.

Hero MotoCorp also saw its scooter sales dip by 60.27 percent at 32,785 units as against 82,517 units in the same month a year ago.