Demonitization hits 2-wheeler December 2016 sales

The demonitization of Rs. 500 and Rs. 1000 notes created a nation-wide cash crunch, the effects of which have been felt across several industries, not least the two-wheeler industry. The slowdown in sales was most acute in rural areas, which are traditionally the cash cows for manufacturers’ entry-level commuter models.

Hero MotoCorp maintained its lead, though its sale of 312,233 units was considerably lower than the 476,012 units it sold in December 2015. Honda (HMSI) followed, clocking in sales 205,158 units. TVS Motor Co. came in third, selling 153,413 units, followed by Bajaj Auto with 106,665 units.

Mahindra Two-wheelers took the worst hit, with December 2016 sales (1,498 units) falling 85 percent as compared to a year before (10,488 units for December 2015). The skies were not gloomy for all manufacturers though – Yamaha, Royal Enfield, Piaggio, Suzuki Motorcycles and Triumph all enjoyed higher year-on-year sales for December 2016. Piaggio was the biggest winner, with year-on-year sales increasing 115 percent (1618 units in December 2015 to 3482 units in December 2016), followed by Royal Enfield with a 41 percent increase.

What this sales analysis indicates is that the crunch felt by the industry is indeed on account of commuter motorcycles. Manufacturers whose primary models are commuters have taken a hit, while manufacturers that cater to slightly more premium segments have actually registered positive growth. In any case, the calendar year 2016 has been a good year for two-wheeler manufacturers on the whole, something that is bound to get better as the macroeconomic situation settles down and in fact improves in the wake of demonetization.