The effect of demonetisation on the economy is becoming clearer with more data points emerging. A month after the event statistics show that vehicle sales in November declined by 5.5 percent, as consumers postponed purchases amid a massive cash crunch.
The Society of Indian Automobile Manufacturers released the November sales figures today, which shows that domestic sales of commercial vehicles like trucks and three wheelers have shown an overall decline while passenger cars have remained almost the same.
Passenger cars are an indication of consumer spending on vehicles in urban, suburban and tier 2 cities, commercial vehicles is a proxy for tracking economic activity and two wheelers are mostly purchased in rural areas. The implications are clear. While economic activity and rural areas have been badly hit, even urban consumers are feeling the pinch of demonetisation.
Passenger vehicles (cars, vans, utility vehicles) have shown a marginal rise of 1.8% in November 2016 over the same period a year ago.
However, within this segment van sales plunged by 7.5% while total number of cars sold increased by just 0.3%. The surprise was Utility Vehicles, which registered a decent 10% growth.
Sales of commercial vehicles on the other hand fell by 13%. Breaking down this segment, the data shows that goods carriers (trucks, lorries) registered a massive decline of 19%. This indicates that vehicles used to transport goods like agricultural produce, industrial commodities and consumer durables have taken a hit because economic activity has been disrupted. Passenger carriers though registered a growth rate of nearly 40%.
Three wheelers sales plunged by 26%, selling 33,662 units in November 2016 compared to 45,425 units in November 2015. Two wheeler sales fell by 5.8%. Motor cycles declined by 10.2% while scooters fell 1.85%.
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