The demonetisation had a severe impact on the sales of two-wheelers in the country. Especially, motorcycles took the worst hit in the aftermath of demonetisation.
The cash-driven motorcycle segment nosedived in the rural market. Major manufacturers including Hero MotoCorp, Bajaj Auto, and TVS Motor Company reported a decline in sales in December 2016.
India's largest two-wheeler manufacturer, Hero MotoCorp reported a negative growth of 33.9 percent in December 2016. Bajaj Auto too suffered 11 percent dip in sales as compared to the same period of 2015.
Likewise, TVS Motor Company also reported negative growth of 8.76 percent, as the cash crunch took a toll on the two-wheeler segment.
According to industry estimates, 50 percent of the motorcycle sales comes from the rural market. The entry-level models are in high demand and it is a cash-driven segment.
As per a report from SIAM, two-wheeler sales stood at 2,43,251 units compared to 13,20,552 units in November 2016. Motorcycle sales were down by 10.21 percent as compared to December 2015.
Before demonetisation, two-wheeler sales were up by 8.72 percent, but post demonetisation, the two-wheeler sales slumped. Industry experts believe that because of inventory pileup, manufacturers have reduced the production to cope with the situation.