Demonetisation causes 70% dip in new car registration, huge discounts

It was November 8th when the demonetisation of Rs. 500 and Rs. 1000 was announced. The hangover from the decision has left many businesses across the length and the breadth of the country in slow lane. The automotive industry has suffered quite a bit with slowdown in new car market as well as used car market. Manufacturers are now trying to lure the customers with cashless buying options and huge discounts. Here are few manufacturers with big discounts on their cars.

Mahindra

SsangYong Rexton: The not so popular SUV from SsangYong, which is a subsidiary of Mahindra is now selling with a huge discount of Rs. 2.7 lakh. The Rexton is a very comfortable SUV and is built on the Mercedes-Benz M-Class (W 163) platform. The Rexton is known for its good handling, and feature rich interiors.

Mahindra Scorpio: Mahindra’s one of the largest selling cars is also affected by the demonetisation and is now selling with a discount of up to Rs. 50,000 depending on the variant.

Mahindra Bolero: The much popular car among the rural areas of India gets discount of up to Rs. 67,000. Mahindra recently launched the sub 4-metre Bolero to gain tax benefits and the discount offer applies on the new car too.

Mahindra XUV500: The premium MUV from Mahindra is the largest selling car in the D-Segment. After demonetisation, even the XUV 500 gets a discount of Rs. 90,000.

Mahindra KUV100: The cheapest car from Mahindra with SUV looks had become quite popular in the market. The car now gets a discount of Rs. 73,000.

Maruti

Maruti Celerio: The Celerio gets up to Rs. 1 lakh of discount (Rs. 50,000 cash and Rs. 50,000 exchange bonus). The budget car from Maruti is also one of the top selling cars of India.

Other major discounts:

Skoda Rapid pre facelift: Skoda recently launched the new Rapid, the older model gets a huge discount of Rs. 1 lakh plus many other dealer discount.

Hyundai Verna: The mid-size sedan gets a discount of Rs. 1 lakh, including the exchange bonus.

Honda City petrol – Rs. 50,000, it includes the first year insurance. Interestingly, Honda City overtook the sales of the Ciaz recently.

BMW 3-Series: The entry level sedan from BMW now comes with a discount of Rs. 7 to 10 lakhs

BMW X3: Rs. 6 to 10 lakh

BMW 5 Series: Rs. 7 to 10 lakh

Mercedes-Benz E-Class: Rs. 8 lakh + Rs. 2.5 lakh cash voucher

What is Demonetisation doing to the industry?

Now almost all the cars are being sold at a discounted price. The footfalls to the showrooms have dipped sharply and a report says that new car registrations are now down by as much as 70%. Citing the low sales, manufacturers like Hyundai, Honda and Renault have cut down the production due to the dip in bookings. In Kolkata, the dealerships reported zero sale of any luxury cars like Mercedes, Audi, BMW, Jaguar, Volvo and Porsche.

Praveen Shah, President (automotive), Mahindra and Mahindra said

“While we expected an improved auto industry performance on the back of the festive season and other positive parameters such as rural demand and softening of interest rates, the sudden announcement of demonetisation has brought in an immediate disruption and uncertainty,” said Pravin Shah, president (automotive) for M&M.

There has been similar echoes from the top honchos of the automotive industry. Here is what Honda Cars India’s Chief, Yoichio Ueno said

“The November month saw major disruptions in the market due to the on-going effects of demonetisation and cash crunch. The consumer sentiment was low and footfalls and enquiries at the dealerships also slowed down during the month,”

No one is giving a time frame on when the situation will come back to normal. The loss of interest in cars and many other consumer products like electronics and mobile phones are dipping due to low cash at the consumer’s disposal. Even though the government has announced that the cash crunch will be solved by 31st December, the huge crowd outside the banks tell a different story. It will surely take much longer for the markets to return to normalcy after the whole country goes through the severe cash deficit.

Quotes and data: TOI