Notes Ban And Its Effect On Automobile Industry

Last Updated On: November 10, 2016
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The recent notes ban have taken the whole nation by storm. From a small vendor to a large business owner, the economic balance of each individual has been shaken. Now, in this huge revolution of high denomination notes ban, every industry will face some hurdles and the automobile industry is not any exception. So, this article will explain how the ban on Rs 500 and Rs 1000 notes will affect the overall car or bike, buying and selling process. As our nation is a kind of economy which is being regulated by a huge amount of daily cash flow, this demonization is bound to have an impact on how every individual executes its transaction at various places.

Notes Ban
Cars Varying From Low To High

Image Credit: Bauercdn

Buying Process Might Slow Down

In India, any car or bike buying process starts with a booking amount and usually this booking amount is given in hard cash. As Rs 500 and Rs 1000 notes are now out of the market, booking with small denomination notes will be very difficult for any individual. So, until Rs 2000 notes are not circulated in the market, customers might avoid making any transaction which requires a large amount of cash.

Luxury Cars & Bikes Sales Will Witness A Dip

Just like any small car or bike, a luxury car or sports bike is booked with hard cash. And this amount is usually in lakhs for high-end cars and bikes. So, despite having a stash of cash in 500s and 1000s, no dealer will accept and let you drive off a brand new luxury car or sports bike from the showroom. The people with black money who usually use this money to buy a high-end car or bike will now have to find a new way to utilize their money before 31st December.

New Discount Offers

Also Read: GST : How it will effect the car buying process

As each and every individual will now only spend on the most important utilities, manufacturers will unleash new discount offers for customers to attract them. Usually, the sales in the month of November and December is quite low for all the manufacturers and amidst this high denomination notes ban, this dip will surely increase and thus, manufacturer, will come up with some highly attractive offers.

Online Booking

In a situation where cash is limited with every individual, online players might take this opportunity to take the leading edge. Marketplaces like Flipkart, Amazon and PayTM are already taking booking online and their sales might shoot up in this situation.

Used Cars & Bikes Sales Dip

Not only new cars and bikes sales will be affected, even the used car market will see a huge dip. The majority of the transactions are done in hard cash and apart from RTO registration, the government doesn’t really bother. But, as the cash supply is limited for now, the sales in the used cars and bikes industry will be affected to a great extent.

Price Dip

Notes Ban
Notes Ban Might Effect Used Cars Sales

Image Credit: Iacpublishinglabs

The market is slow, buyers are less, and definitely seller cannot afford a stagnant position. Therefore, the buyers might bargain for next couple of months. The more expensive the vehicle, the bigger the price drop.

Also Read: Future Of Safety Norms In India

In the overall situation, one thing is sure, the use of black money in all these transactions will be reduced to minimal and this is a good step, as all the transactions now will be traced and people with black money will be identified. So let us wait for some time more to get a clear idea of how things will be heading from now and how manufacturers will deal with this situation.

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Abhishek is a Content Strategist with hands on diversified projects. Being an automobile enthusiast, his passion for cars and curiosity to explore the field helps him in evolving engaging content with an eye on each and every precise detail.

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