As expected the demonetization of old currency notes has waved down the sales of automobiles drastically. The sales have hit the lowest ever mark in the country in the past 16 year in the month of December according to the data that has been updated by Society of Indian Automobiles Manufacturers (SIAM).
The ban on the old notes of INR 1000 and 500 has resulted in a decline of 18.66 per cent in the sales of Scooters, motorcycles and cars over the course of December and November, post 8th. The total number of vehicles sold in the last month were 12,21,929 units which is a drastic fall in comparison to the 15,02,314 units registered in the same month in 2015. Surprisingly, the light commercial segment saw a growth of 1.15 per cent with a number of 31,178.
"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 demonetization," said Vishnu Mathur, director general of SIAM.
This is because the consumers have postponed the purchase of products which are not necessary for sustenance. The cash was already scarce to pay for basic necessities which led to the decline in purchase of vehicles even if the prospective buyer was in need of one.
Another reason for low sales was because a lot of inventory was pushed to dealers for sale and meet the targets which were not completed during the year but the footfalls dropped drastically and there were fewer buyers than expected.