Demonetisation Likely To Affect Indian Automotive Industry

The Indian Government recently demonetised Rs. 500 and Rs. 1000 notes across the country. Now, this has put the automobile manufacturers in India into a little scare. Sale of two-wheelers and four-wheelers could be disrupted owing to the demonetisation announcement.

Rural area still performs the majority of their purchases via cash. The majority of two-wheeler and four-wheeler purchases are also made completely with cash. This will affect all automotive manufacturers for a short period and manufacturers expect everything to normalise within a few months.

Majority of two-wheeler and four-wheeler down payments are performed with cash transactions. This is going to largely affect how customers make purchases and will affect overall sales. Rural area will take a while before they get comfortable making transactions without money.

Currently, four-wheelers and larger vehicle purchases demand Permanent Account Number (PAN). Two-wheelers are exempted from this decision. Usually, all these purchases are made entirely with cash and sales could be affected for a short period, until customers get used to cashless transactions.