Uncertainty looms in automobile sector, Demonetization and it’s impact on Indian Economy.
Last December 2016, Society of Indian Automobile Manufactures (SIAM), called demonetisation a temporary disruption in otherwise healthy industry, and hoped that it will pass quickly but clearly the impact has been deeper and might have dented a few hopes at the end of 2016. In this particular case, all other Indian vehicles association declared about their several positions in economical sectors and the positive position according to the economic percentage. There was a legal assurance in the real impact of demonetisation on automobile would like to be visible in last December and could last till fourth (March) quarter of FY17. Real economy would like say about the industry infrastructure and on how soon the industry and there consumers would like to adapt higher non-cash transaction.
Religare Capital Markets ltd hosted a conference call with the Federation of Automobile dealers Association (FADA), to discuss the impact of demonetisation on India’s automobile industry. John K Paul, President and Nikunj Sanghi, Director for International Affairs & Global Relations, represented FADA during the conference call.’
Religare says about the impact of Indian Economy and there are some uncertainties over the pace of recovery in the medium term. According to the discussion Indian Economy is going to lower level growth and there is a chance to recovery as soon as possible and cash crunch trigger to the higher level of immediate effect. According to FADA our country need some basic changes in case of Institutional infrastructure and therefore basic economic growth.
As per FADA, sales of commercial vehicles- CV- will be affected the most, followed by two- wheelers and passenger’s vehicles –PV. Entry level PVs could be the least affected as the higher. Religare also says about the government scrutiny on high-value transaction is likely dent demand for premium. One investigation in the rural areas and therefore immediate effects of revival matter in case of two-wheelers in rural areas will be contingent on the pace of liquidity infusion back into the economy. Vehicles are all responsible for the matter of transportation and there are some basic rules through a systematic way.