Demonetisation Hit Auto Industry Reduces Production

Demonetisation hit auto industry reduces production

Demonetisation hit auto industry reduces production; due to the ban on Rs. 500 and Rs. 1000 notes sales have declined as well

Demonetisation has hit the Indian auto industry very hard. The ban on Rs. 500 and Rs. 1,000 currency notes has impacted the automotive sector adversely. The carmakers and two-wheeler manufacturers present in India, are reducing their productions. The sales figure has dropped rapidly, right after the ban which came into effect from 8th November.

India’s second largest two-wheeler manufacture, the Honda Motorcycle and Scooter India (HMSI) have decided to rationalize production to keep the inventory pressure lower on its dealers. For that, the Japanese company has slashed the production of the motorcycles and scooters. Mr. YS Guleria, the senior vice president of sales and marketing, HMSI has said, the company is working towards no-production days to keep balance with declining demand.


Also read: Hero MotoCorp Faces Steep Decline in Footfalls Due to Demonetisation

India’s largest two-wheeler manufacturer, the Hero MotoCorp is also experiencing steep decline in the footfalls of customers in its showrooms. In the first two days of demonetisation, the footfall declined to only 15% compared to what was in October. The company claims that, the sales figure has improved lately.

Among the carmakers, Honda is considering to slowdown its production after experiencing declining demand across the country. Booking for the Honda cars in India has declined by 40% due to the currency ban. Though India’s largest automaker, the Maruti Suzuki and another major automaker Hyundai didn’t confirm the slowdown, but the dealers of both the brands have been experiencing steep decline in sales. Both the company is expecting the demand to rise soon, however.


Also read: Maruti Suzuki Offers 100% Finance Facility to Boost Demonetisation-hit Sales

The dealers across the country are not willing to take any chance by keeping a heavily loaded inventory. As the auto dealers are facing declining footfalls and the automakers are slowing down the production, the after-sales component market is also down because of the demonetisation. The component market in northern India is facing business down by 60% – 70%.

Source: ET Auto