Demonetisation though expected to do good for the future seems to have caused major havoc for the present. People struggling for authorized cash, kilometer long queues outside ATM’s and banks all day long. And even when people do manage to get the cash, they think twice before spending it on expensive things which is understandable considering the struggle they had to go through to get it.
Cars are another of those expensive items which at a time like this are bound to be on least priority. And this will be even more so when it comes to used cars where people will prefer to wait to put their used cars for sale in the market since the used car market is primarily driven by cash.
Manufacturers also claim that sales of new cars could drop by as much as 50 per cent till the cash situation is brought under control. Speaking to used car dealers, the situation is pretty grim. According to them enquiries have gone down by almost 80 per cent with almost everyone thinking about withdrawing money with no one thinking about buying a car. And even if they do, it’s with the old cash which is useless for the dealer.
Putting forth a figure, almost four million used cars are sold in the country every year, which is more than the number of new cars sold. Even for new cars, the down payments are mostly made in cash which brings us back to the main problem again. Luxury car manufacturers are dissuading people from making purchases with cash since it gets difficult for them to handle the cash as well. Maruti Suzuki however has said that the effect of Demonetisation would be negligible as almost 75 per cent of the sales are through loans for both new and used Maruti cars.