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Demonetization leads to a mixed bag for automobile sales in December

Reflecting challenges faced by automobile industry in the wake of demonetization, auto majors Hyundai Motor India, Mahindra & Mahindra and Ford India reported decline in their domestic sales in December.

Other firms such as Tata Motors, Renault, Nissan and Volkswagen, however, reported increase in their Indian sales in December.

Hyundai Motor India Ltd (HMIL) said its domestic sales in December were at 40,057 units as against 41,861 units in the same month previous years, down 4.3%.

HMIL Senior Vice-President, Sales and Marketing, Rakesh Srivastava had stated that demonetization impacted consumer sentiment creating a challenge and walk-ins at showrooms were down by around 40% while overall retail sales were down by 24-25% immediately after the note ban.

Retail sales had, however, picked up in December by 5% as compared with the same month previous year, he said while adding it might take a quarter to normalise.

Mahindra & Mahindra’s sales in the domestic market were down 1.5% to 34,310 units last month as compared to 34,839 in the year-ago period.

“The auto industry continues to go through challenging times, grappling with the short-term effects of demonetization as well as reduced and postponed purchase decisions. However, we believe there will be a gradual pick-up in demand starting next few months,” M&M Chief Executive (auto division) Pravin Shah said in a statement.

Likewise, Ford India also saw its domestic sales dip by 6.04% to 5,566 units last month as against 5,924 units in the same month a year ago.

“As we move in 2017, the industry does face some short-term headwinds given the uncertainty regarding the impact of demonetization and GST, while the medium to long term outlook continues to be positive,” Ford India Executive Director (Marketing, Sales & Service) Anurag Mehrotra said.

Hinduja Group flagship company Ashok Leyland reported a 12% decline in total sales at 10,731 units in December 2016. The company had sold 12,154 units in December 2015.

On Monday, the country’s largest car maker Maruti Suzuki India had posted December domestic sales at 1,06,414 units, down 4.4% from 1,11,333 units in December 2015.

Some companies, however, managed to increase their sales in December.

Tata Motors reported 35% increase in its domestic passenger vehicles sales at 10,827 units last month as compared to 8,069 units sold in December 2015, Tata Motors said.

“We continued our growth momentum in December on the back of robust sales, led by positive response for the Tata Tiago.

This has resulted in planned stock reduction in the network,” Tata Motors President, Passenger Vehicle Business, Mayank Pareek said.

However, Tata Motors’ combined sales of commercial and passenger vehicles increased by just 1% to 35,825 units in December over 35,416 units a year ago.

German auto major Volkswagen reported a 68.72% increase in sales in India at 4,348 units last month as compared with 2,577 units in December 2015.

Similarly, Renault India reported a 9.2% increase in domestic sales at 11,244 units in December as compared with 10,292 units sold in the same month a year ago.

Nissan Motor India also reported a 21% increase in domestic sales in December 2016 at 3,711 units as against 3,065 units sold the same month a year ago.

Commenting on the sales performance, Nissan Motor India Managing Director Arun Malhotra said: “Nissan India achieved healthy sales in December by posting 21% year-on-year growth despite the challenges of the demonetization issue. This strong performance came on the back of continued success of Datsun redi-GO and the great customer response to the redi-GO SPORT.”

In the two wheeler segment, Bajaj Auto reported 22% decline in total sales in December at 2,25,529 units as against 2,89,003 units during the same month a year ago.

The company’s sales of motorcycles in the domestic market dipped by 11% at 1,06,665 units as against 1,20,322 units in the year-ago month.

India Yamaha Motor reported a 28% increase in domestic sales to 49,775 units in December.

Royal Enfield had reported 41% increase in its domestic sales at 56,316 units in December as against 40,037 units in the same month previous year.