The auto sector is likely to witness a decline in the December wholesale figure with the rural retail market suffering a double-digit fall as compared to its urban counterpart due to liquidity crunch post demonetisation, says a Nomura report.
According to the Japanese brokerage firm, normalised availability of cash may happen by February-March 2017, post which growth is expected to pick up.
´We expect December wholesales to be impacted by a sharp decline in retail sales due to demonetisation,´Nomura said in a research note, adding that Original Equipment Manufacturers (OEMs) might go for inventory de-stocking to clear off 2016 model year inventory.
The report further noted that ´rural retails are impacted more (double-digit decline) compared to the urban segment, due to the liquidity crunch.´
The outlook for the auto sector, however, looks bullish post the normalisation of cash crunch.