Auto Industry Recovers From Demonetisation Impact

Society Of Indian Automobile Manufacturers (SIAM) released the overall automotive sales data for the month of January, 2017 and it does look like that the Indian automotive industry is slowly but surely coming out of the slump in the months of November, 2016 and December, 2016 on account of government's demonetisation drive.

"In most of the sectors, we have seen improvement. In some sectors we have seen very good growth also like passenger vehicles, where we have seen a growth of 14.4 per cent. And not only passenger vehicle as a whole, but almost every segment has shown growth. That is very encouraging! This makes us believe that the effect of demonetisation, at least in the passenger vehicle industry is now finished," said Vishnu Mathur, Director General, SIAM.

For the period of April-January 2017, the sales of passenger vehicles grew at 9.17 per cent. SIAM believes that if the month of February and March, 2017 go as planned, in terms of sales, then this particular segment can touch the 10 per cent mark as forecasted. In January, 2017, the passenger car sales showed a growth of 14.4 per cent over January, 2016, with the utility vehicle segment showing maximum growth of 24.47 per cent. SIAM says that the passenger vehicle segment in the country and successfully navigated through the quagmire of demonetisation and business is as usual.

As far as two-wheelers are concerned, the period of April-January, 2017, the total sales declined by (-) 1.09 per cent when compared to the corresponding period last year. The demonetisation drive hit the sales of the two-wheelers the worst as almost 50 per cent of the two-wheeler sales occur in rural areas where cash transactions are still prevalent. But even then, the sales are slowly picking up. For the month of January, 2017, scooters and motorcycles saw a negative growth of 14.5 per cent and 6.07 per cent respectively as compared to the sales in the month of January, 2016. In comparison, the percentage de-growth for scooters and motorcycles in the month of December, 2016 were -26 per cent and -22 per cent respectively. So, purely going by those numbers, we can safely say that the two-wheeler industry in the country is definitely on the mend.

(Commercial vehicles saw a small negative growth of -0.72 per cent in sales for January, 2017)

"In the two-wheeler segment, it's a very large base. Although we have seen that there has been some momentum loss because of demonetisation, it will take some time to stabilise. The numbers are improving. The temporary effects of demonetisation are going away in some segments and in the next two months, we expect full recovery to happen," Vishnu Mathur added.

Coming to commercial vehicles, the overall segment grew by 3.03 per cent in the period of April-January 2017 corresponding to the same period last year. Medium and Heavy commercial vehicles saw a growth of -1.53 per cent in April-January 2017 while LCVs saw a growth of 6.54 per cent in the same period, as compared to April-January 2016.

For the month of January, 2017, the LCVs showed a negative growth of -1.86 per cent and the Medium and Heavy commercial vehicles showed a rather negligible growth of 0.61 per cent as compared to January, 2016. If we consider commercial vehicles as a whole then, the percentage growth was -0.72 per cent year-on-year.

In totality, the overall industry sales for the month of January, 2017 was 1,620,045 units as compared to 1,700,141 units sold in January, 2016. The exact difference in the numbers sold is 80,096 units and the percentage change is -4.71. So there is still some way to go before the Indian automotive industry is completely out of the woods.