NEW DELHI: The impact of demonetisation on car sales seems to be waning as a majority of companies, led by market leaders Maruti and Hyundai, opened the new year on a healthy note with a double-digit growth in January volumes. Two-wheeler companies, however, are yet to realise a full recovery as top companies such as Hero MotoCorp continue to witness a double-digit fall in demand.
Maruti Suzuki opened the year on a strong note as it sold 1.33 lakh units against 1.06 lakh units in the same month last year. The volumes were aided by a strong demand for compact model Baleno and mini-SUV Brezza, just as the company also opened the sale of new mini-car Ignis.
Maruti chairman RC Bhargava has said earlier that the effect of note-ban and demonetisation had been coming down as far as the company’s models are concerned. The company will be starting production from its new plant in Gujarat where it will manufacture the Baleno.
For Hyundai, there was a growth of 10% and SUV Creta has been leading the charge for the Korean maker. Rakesh Srivastava, senior VP at Hyundai India, said that the Union budget is expected to give a boost to the economy, especially rural, with the focus on infrastructure. “This will create a robust business environment, thus helping the auto industry and positively contributing to the GDP.”
Mahindra Mahindra, however, could not realise positive numbers in January and its volumes slipped by 9%, the same as for Honda Cars India. Pravin Shah, chief executive (Automotive) for MM, said that rural markets and the commercial vehicles category continue to face challenging times.
“Going forward we expect the announcements made in the Budget to positively impact the economy and also the industry, especially in view of the emphasis and the allocations made for rural, agri and infrastructure. We are confident that this will lead to a spur in demand,” Shah said.
The demonetisation measure, announced on November 8, had impacted demand in the auto industry with many companies registering a squeeze in volumes. December 2016 had seen numbers fall for both Maruti and Hyundai, highlighting the challenge faced by the industry in general.
Officials said that with the cash situation improving across the country and also the deep discounts, buyers have been coming back to showrooms. The ease in interest rates are also helping get footfalls and companies expect that numbers will gradually pick pace in the coming months.
With the Budget not having any significant announcements for the auto industry, companies are now looking at the rollout of GST which may streamline duties across some of the categories.