In just a few hours, India will be marking the anniversary of demonetisation on November 8. Under demonetisation, the Modi government banned the old Rs 500 and Rs 1000 notes in order to curb the brewing corruption in the country. Well, this piece in not entirely about the note-ban drive or how many lives were lost or even the after-problems which were faced by the commoners. A lot has already been said and debated about after-math of the demonetisation exercise on common lives. While the Modi government boasted about the demonetisation drive at every stage, the note ban incident drew a lot of criticism from the opposition. To be honest, India is one country where it is very difficult to see the Centre and opposition standing together.
However, the demonetisation actually garnered mixed reviews from the people. While some supported the Modi government over their drive to end black money in the country, many who lost their loved ones while standing in serpentine queues criticised the move to its core. While the development and the economy of India is still the prime topic of debate, the BJP government has no doubt proven itself on paper but a lot remains to be desired on the implementation front. Even though it is taking time to work out the many promises that were made by the BJP, India gained its long-awaited recognition in terms of doing business. A report by the World Bank said that India jumped 30 positions to 100th rank in terms of doing business.
Relax, we are not giving any predictions about the upcoming elections, we are just trying to bring out an aspect of demonetisation which almost went unnoticed. Apart from impacting the lives, the demonetisation also slowed the flow of cash in the system, as people were left with no cash to spare overnight. One of the biggest sectors to get a jolt post demonetisation was the luxury car sector — Audi, BMW, Mercedez Benz, Volvo and much more.
India is said to be a country where people celebrate their success by pampering themselves with some expensive toys of gadgets. For say, if a businessman finds some good profits, he would go out and pamper himself with a brand new luxury car. Or maybe a son doing good in life would like to present their parents with a luxury wagon. But, not adding much we all know how it went post demonetisation.
One of the major sectors which faced the demonetisation jolt was the luxury car sector. As per reports, a VP of Sales and marketing at Mercedes India said that these sudden policy changes are hard to explain. He further added that the overall business environment is not helpful. “We are now cautious on our outlook,” he added.
Joining the chorus was an Audi dealer who said that the walk-ins at showrooms have gone down significantly. He said, “While black money was not playing a major role in the sales of luxury cars, the issue is of sentiment. People are unsure of what might happen in the coming months, and so are postponing purchases. Nobody wants to be in the unnecessary limelight.”
In 2016, a few of luxury car makers operating in India, faced loss post the note ban drive. Mercedes registered a sale of 13,231 cars in 2016. The numbers with Mercedes slipped to 2% in comparison with 2015. Similarly, Audi faced a massive loss as it registered the sale of only 7,742 units in 2016, facing a dip of 31%.
Meanwhile, commenting on the demonetisation drive, Roland Folger, managing director and chief executive officer of Mercedes-Benz India Pvt. Ltd, described the drive as a ‘slingshot’. Speaking to Livemint, Roland said that it’s been almost a year and the jury ‘is still out on whether the move was a success or not in meeting its strategic aims’.
Roland said that the immediate effects were visible right after the demonetisation drive as the footfalls dropped by 50% to 60% in November 2016. The CEO of Mercedes-Benz India also highlighted that the losses came in at the time when the German automaker was confident of growing in double digits despite the unexpected ban on vehicles with over 2-litre diesel engines in the NCR for a prolonged period.
While speaking to daily Roland also said, “We have seen customer sentiment gradually picking up and this was reflected in an uptick in sales from the second quarter of 2017 and in the first nine months of 2017, we have achieved record sales of 11,869 units. We are firmly on track with our plans and believe that we will be able to meet our target for this year and the luxury car industry will get that elusive growth story back.”
It has been almost a year since Prime Minister Narendra Modi announced the demonetisation drive. During this period of time, most of the people stood beside Prime Minister’s decision and hailed him for his step of curbing black money and corruption. While all the supporters are still waiting for their ‘Rs 15 lakhs’, the critics pray that their dreams come true in the near future.