Two wheeler sales could crash to lowest in 6 years due to demonetization

The effects of demonetization are slated to have a devastating outcome where sales of two wheelers are concerned. Estimates reveal that for the month of December 2016, sales will dip 35% to below the 1 million unit mark which will be the lowest in 6 years.

Average monthly domestic sales recorded during the period April to November 2016 stood at 1.57 million while it was way back in November 2010 that sales dipped to 9,28,660 units. Sales during April to October 2016 grew 16% to 11.34 million units while sales dipped by 6% in November to stand at 1.24 million units.

The effects of demonetization (old currency notes of INR 500 and INR 1,000 were discontinued overnight), introduced by the Modi Government in November 2016 has played a major role in diminishing four and two wheeler sales but more prominently where sales of two wheelers are concerned.

It may be noted that most two wheeler sales are seen in rural areas while most sales transactions are in cash. Demonetization has affected sales adversely with buyers either postponing purchases or putting off purchases of two wheelers altogether.

Honda two wheeler sales 2015 festive season

Hero MotoCorp has felt the effects of demonetization and reduced sales while Pawan Munjal expects a recovery sometime during January to March 2017. Y S Guleria of Honda Motorcycle & Scooter India also noted a significant dip in two wheeler sales due to which the company has resorted to cut in production till markets recover with a revival of sorts only expected in the fourth quarter of this financial year.

via ET Auto