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.