Car sales stay in slow lane for 4th straight month

New Delhi: Passenger vehicle sales fell for the fourth straight month in August with carmakers controlling dispatches to dealerships ahead of the announcement of revised GST rates later this month.

As per industry estimates, as many as 330,000 vehicles were dispatched from factories to dealerships last month, a 7% decline from 356,000 units a year earlier.

A cut in GST rate on cars is expected to help reduce prices, potentially boosting sales. The GST Council, the apex decision-making body for the indirect tax, is slated to meet September 3-4, to discuss lowering the levy on small cars to 18% from 28%. Larger cars and SUVs are likely to face the special rate of 40%, compared to 43-50% tax, including GST and cess, currently.


"Many OEMs (original equipment manufacturers) have been consciously calibrating dispatches to dealers as the revised GST rates will be announced later this month," said Partho Banerjee, senior executive officer, Maruti Suzuki. "This impacted wholesale numbers in August. But the indications in the market are positive."

He said Maruti's bookings increased by 16% during the Onam festival in Kerala, while there is good traction in Maharashtra during the Ganesh festival.

Maruti Suzuki sold 131,278 vehicles in August, an 8% decline from a year earlier.

Banerjee expects sales to revive once the GST rates are revised. "What we understand is that the GST overhaul will be a major reform which will not only be good for the auto industry but also for the overall economy."

Hyundai Motor India, which raced ahead of Mahindra & Mahindra (M&M) to reclaim the second slot in the local market last month, sold 44,011 vehicles. Tata Motors and Mahindra & Mahindra recorded sales of 41,001 units and 39,399 units, declining 7% and 9% respectively.

"August witnessed relatively robust demand in the SUV segment amidst anticipated GST rate changes," said Nalinikanth Gollagunta, CEO, automotive division, M&M. "With the final GST announcement approaching, we consciously decided to bring down the wholesale billing to minimize the stock being carried by our dealers. We look forward to the GST rationalisation, which would be a demand driver through the festive season."

"September will be an important phase for the industry overall, and we will closely observe market trends as they unfold," said Varinder Wadhwa, vice president, sales-service-used car business at Toyota Kirloskar Motor (TKM). Sales at the company remained flat at 28,589 units last month.

Hyundai's domestic sales fell 11% while exports grew 21% last month. Tarun Garg, chief operating officer, HMIL said, "Our goal is to establish India as a strategic manufacturing base for emerging economies and to become Hyundai's largest export hub outside South Korea. This ambition is gaining strong traction month on month."