New Delhi, Jan. 10: Automobile sales fell 18.66 per cent in December - a 16-year-low, in the first full month after the demonetisation announcement - as the industry drives into a challenging three months till March fraught with uncertainty over GST and the government announcing any budget sop, on which hinge the revival of consumer sentiment.

The December sales figure of 1,221,929 units - down from 1,502,314 in 2015 - includes two-wheeler and three-wheeler numbers along with passenger and commercial vehicles sales.

"This is the highest decline across all categories since December 2000, when there was a drop of 21.81 per cent in sales. The reason is largely because of the negative consumer sentiment in the market post demonetisation," said Vishnu Mathur, director of SIAM.

Analysts and industry players said the sector would revive if major sops were announced in the budget to directly or indirectly increase the purchasing power of consumers.

"A growth oriented budget and competitive GST rates will certainly help the growth of the sector in 2017," said Abdul Majeed, partner - Price Waterhouse and an auto expert.

He added that overall the first quarter of 2017 will be a challenging one for the industry because apart from demonetisation, there were uncertainties such as GST rates and budget announcements.

"People tend to hold off on purchase of vehicles till the uncertainty is resolved," said Majeed.

Mathur said sales may pick up depending on "how the budget comes up with steps that will boost consumer sentiments and increase disposable income besides improving the overall economy".

Mathur is hoping that the budget will not bring any "shocks" but would rather announce positive decisions such as fleet modernisation programmes, incentives for electric vehicles and reduced interest rates to improve market sentiments.

"The way things are going, if the budget doesn't bring big steps... we may miss our forecast," said Mathur.

Domestic car sales were at 1,58,617 units last month against 1,72,671 units in December 2015, down 8.14 per cent, said data from Society of Indian Automobile Manufacturers (SIAM). It was the lowest rate since April 2014 when sales declined 10.15 per cent.

Overall passenger vehicle sales (cars, utility vehicles and vans) declined 1.36 per cent to 2,27,824 units in December 2016 from 2,30,959 units a year ago. The previous biggest decline in sales in the segment was in October 2014, a drop of 7.52 per cent.

Similarly, total two-wheeler sales in December also witnessed the steepest decline since SIAM started recording data in 1997. It tanked 22.04 per cent to 9,10,235 units compared with 11,67,621 units a year ago.

Scooter sales, which is mostly urban-centric, fell 26.38 per cent to 2,84,384 units in December 2016 from 3,86,305 units in the year-ago month - the biggest decline in over 15 years. The previous such decline of 27.05 per cent was recorded in March 2001.

Motorcycle sales also saw the biggest decline in eight years to 5,61,690 units from 7,24,795 units a year earlier, down 22.5 per cent. The segment witnessed the biggest drop of 23.07 per cent in December 2008.