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Demonetisation Plays Spoilsport in December Car Sales

By   |   03 January,2017

The sales reports of car makers for the month of December 2016 are in and one thing is rather clear. The attempt by the Government of India to crack down on black money by demonetising the 500 and 1000 rupee notes towards the end of last year has affected car sales with the vast majority of companies reporting declines. However, we think that the market will settle soon enough and that the automotive sector will be back in the green in the coming months.

Maruti Suzuki sold 1,17,908 cars in December 2016, compared to 1,19,149 cars in December 2015. However, the exports of this company shot up by 47% from 7,816 units to 11,494 units between the December months of 2015 and 2016. One of the major reasons by which the fall in sales was prevented from being worse was the introduction of the Vitara Brezza compact SUV in 2016.

Interestingly, Nissan India reported a rather robust sales growth in December 2016. The company logged sales of 3,711 units last month compared to 3,065 units in December 2015, which is a growth of 21%. This growth grew to a staggering 50% when combined with the sales figure of Datsun. Partner company Renault India also recorded a strong sales growth. The French car maker sold 10,292 vehicles in December 2015, which went up by 9.2% in December 2016. This sales performance can be attributed to the Kwid as Renault sold over 1 lakh units of this little car during the year.

As seen from the above examples, all it takes is one successful model to mitigate losses for a car maker. Another case in point is Volkswagen, whose sales during December 2016 (4,348 vehicles) skyrocketed by a stellar 68% compared to its numbers in December 2015 (2,577 vehicles). The sales registers of Mahindra reflected a drop of 4% from 34,839 units in December 2015 to 34,310 units.

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