Vehicle Sales in India Plummet on Demonetization Woes

Disruptions caused by India’s sudden decision to replace 86% of its bank notes caused demand for cars and two-wheelers in the country to shrink 19% in December, according to the Society of Indian Automobile Manufacturers.

The drop to 1.2 million deliveries last month was the market’s sharpest shrinkage for December in 16 years. Passenger-vehicle sales fell 8% to 158,600 units. Commercial vehicle deliveries dropped 5% to 54,000 units. SIAM says demand for two-wheelers plummeted 22% to 910,200 units.

The trade group says vehicle manufacturers will fall short of their 12% sales growth target in the current fiscal year without a government budget that includes steps to boost consumer sentiment and disposable income.