Auto sales feel cash crunch heat

NEW DELHI: The government's decision to ban Rs 500 and Rs 1,000 notes have crippled sales of cars and two-wheelers. The industry may report a fall in November volumes when compared to the previous year, senior officials said. Customer footfalls at dealerships are down by over 50 per cent in certain areas as the sudden cash crunch has led to a "virtual withdrawal" of buyers. And, the situation is "very serious" across many markets, especially in smaller towns and cities, officials at top companies and dealerships told TOI.

Most of the companies such as Maruti Suzuki, Hyundai, Ford, Hero Moto and TVS have been impacted. Even luxury makers such as Mercedes Benz and BMW are feeling the pinch as there has been a slowdown in inquiries and even cancellation of bookings. "The situation in the retail market is bad and business has been impacted nega tively," a senior official at one of the country's leading two-wheeler manufacturers said. "There has been a decline of nearly 50 per cent," the official added.

Kamal Kumar, CEO of Competent Motors, which is the leading dealership for Maruti Suzuki in the national capital, said buyer sentiment remains low ."Business is tough."

There are serious shortterm challenges in terms of lower footfalls and conversions at showrooms, said Rakesh Srivastava, senior VP (sales & marketing) at Hyundai India.

Jnaneswar Sen, who heads sales and marketing at Honda Cars India, said No vember could be a negative month for the auto industry ."Bookings have come down by nearly 40 per cent."

Many dealerships hardly saw any footfalls in the first few days after the announcement."Perhaps most of the footfalls were at ATMs rather than at dealerships," a senior official with a top car company said.

There is also a shortage of working capital at many of the dealerships and the fund crunch has impacted payments to a certain section of the staff.

Companies, however, expect the situation to ease as cash supply increases.