Automobile sales, which is also a true indicator of the state of economy of the country came down crashing to its 16-years low in the month of December, according to data revealed by Society of Indian Automobiles Manufacturers.
Domestic sales of vehciles, including cars, bikes and commercial vehicles were down by 18.66%.
Affected by demonetisation -- the situation where the government sucked out 86% of the bank notes in circulation -- India witnesses its biggest cash crunch ever.
Consumers deferred buying of non-essential products, including cars and bikes.
Some of the companies, including Maruti Suzuki and Hyundai had disclosed earlier that sales in the month of December can go down by up to 20%.
One reason, the sales and marketing head of one of India top three carmakers said, was because a lot of inventory was pushed to dealers in the month of November to meet targets. But, as footfalls dropped to less than half of what it normally is, there were fewer buyers.
All automobile companies put together sold 12,21,929 units, versus 15,02,314 units in December 2015. To be sure, these numbers do not show retail sales, but are what carmakers sell to their dealers.
Nevertheless, there is a decline.
“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,” said Vishu Mathur, director general of SIAM.
Domestic car sales was down by 8.14% to at 1,58,617 units, the lowest since April 2014 when sales were down by 10.15%.
For two-wheeler, which gets a lot of demand from rural the fall was steeper -- 22.04% drop to 9,10,235 units. Scooter sales were down by 26.38% and motorcyles by 22.5%.
“Almost half of two-wheelers sales comes from rural markets, which have been hit hard by demonetisation,” Mathur added.
(With inputs from PTI)