The government cut the GST rate on small cars and SUVS measuring less than four meters to 18 per cent from 28 per cent plus cess, leading to an effective price benefit of 8.5-9.9 per cent.India’s passenger vehicle industry continued to reap the gains of lower taxes with a surge in customer orders on the second day of the revamped goods and services tax (GST) regime.
Carmakers including Maruti Suzuki, Hyundai Motor India, and Mahindra & Mahindra (M&M) said bookings have jumped nearly fourfold on Tuesday, compared to the past few weeks, fuelled by robust consumer sentiments after the cut in GST rates.
Senior auto industry executives and dealers ET spoke to said, with companies curtailing factory dispatches in the first three weeks of September due to weak demand ahead of GST 2.0 rollout, and existing stocks getting liquidated amid record deliveries this Navratri, deliveries of new orders will take time and keep showrooms buzzing at least till December.
“While we were receiving some bookings in the last few weeks, with the onset of Navratri, this number has grown fourfold,” said Vinkesh Gulati, former president at the Federation of Automobile Dealers Associations (FADA) and director, United Automobiles. “The GST cut has been a major boost to sentiments. Customers are very positive.” United Automobiles is among the largest retailers for M&M vehicles.
Gulati said he expects car sales this Navratri to be at least 50 per cent higher than last year. “It could have even doubled. But we will take some time to execute the fresh orders we are receiving, arrange for financing and schedule deliveries. But we are expecting good traction till Diwali,” he said. On Monday, Maruti Suzuki said bookings have jumped 50 per cent since the company announced additional price incentives beyond the GST rate cuts on September 18.
“We are clocking 15,000 bookings every day since the announcement compared to 10,000 earlier,” Partho Banerjee, senior executive officer (marketing and sales) said, adding the company’s small cars are also in high demand.Maruti delivered 30,000 vehicles on Monday, the first day of Navratri. Rivals Hyundai Motor India and Tata Motors delivered 11,000 units and 10,000 units, respectively.
“Two festivals which have gone by-Onam and Ganesh festival-have been lukewarm with customers postponing purchases in anticipation of lower prices post GST cut,” said Tarun Garg, chief operating officer at Hyundai Motor India. “Usually, there is a pause in demand after Navratri, with retails picking up again around Dhanteras. But this time, because of the gap in wholesales, we are expecting a prolongated festive right from Navratri through Diwali to end of December.”
The government cut the GST rate on small cars and SUVS measuring less than four meters to 18 per cent from 28 per cent plus cess, leading to an effective price benefit of 8.5-9.9 per cent.
