Categories: Automotive Reports

Impact of Demonetization on Indian Auto Industry

We are updating our Market forecast for Indian Automotive Industry on Impact of Demonetization on Indian Auto Industry. There will be short,Medium, and long-term impact on Demonetization on New and Used vehicle.

On the 8^th of November 2016, Indian Govt disclosed that the 500 and 1000 notes to be demonetised. Automotive shares were also hurt by this move the BSE Auto index closing with a loss of 2.5% on next day of the announcement.The disclosure of PAN while buying vehicles had already been made compulsory except for two-wheelers. The entry level car segment would have an impact on this move but the rural area would face some slowdown in Two-Wheeler segment.

The passenger vehicle price more than 25 to 30 lakh may see a slowdown in this segment. Here we also analyzed the relationship between Customer types like real state or Contractor, Builder, Farmers, Jewellers, Professionals and another segment.

The next few quarters would see some low number sales and production figure. Unorganized Industry vertical like used car segment will feel the heat of demonization. OEM are now started to offer some attractive discount, Zero down payment and tie up with some banks and online payment firms like to get the buying sentiment up. ACG expects that the challenges are only for short time and there be reviving of consumer demand.

Every segment is effected in a different manner. We have covered following Segment

Vehicle type (Sales & Production), Customer (Retail/Strategic), Dealers, Financiers, Used car Market, Suppliers, Transporters, Logistic Companies (Small to large) and others

Area: Rural, Urban, Tier 1, Tier 2 and others

Macro Economy- IIP, Inflation, GDP, and others

1. Indian Passenger Vehicle