Indian passenger car sales, as denoted by dispatches by manufacturers to dealers hit a speed bump in August, registering a decline of 7.3 percent year on year, amid uncertainty and speculation over the proposed reform of the Goods and Service Tax (GST), forcing automobile companies to recalibrate dispatches to dealers, SteelOrbis learned from the compilation of data released by various companies on Tuesday, September 2.
Total passenger car sales in August have been provisionally estimated by the industry at 330,000 units, a fall of 7.3 percent year on year.
Among the top five leading passenger car makers, four - Maruti Suzuki India Limited (MSIL), Hyundai Motors India Limited (HMIL), Tata Motors Limited and Mahindra & Mahindra - reported declines in sales, and only Toyota Kirloskar Motors Limited achieved a positive growth in sales in August, the industry data showed.
MSIL reported an 8.24 percent fall in sales to 131,278 units, while HMIL saw a 11.15 percent decline in sales to 44,001 units, year on year.
Tata Motors Limited’s sales declined 7.12 percent to 41,001 units and Mahindra & Mahindra saw a fall of 8.96 percent to 39,399 units, year on year. Toyota, an exception, achieved a low 2.49 percent rise in sales to 29,302 units in August.
With the proposed GST reform, the government is aiming to simplify the tax structure. The move includes eliminating the 12 percent and 28 percent slabs, retaining the five percent and 18 percent slabs and introducing a new 40 percent slab for luxury and ‘sin’ goods.
All internal combustion engine (ICE) vehicles, including passenger cars, two-wheelers, three-wheelers and commercial vehicles (CVs), attract 28 percent GST and a compensation cess ranging from zero to 22 percent, depending on size and category, at present.
However, electric vehicles (EVs) and hydrogen fuel cell vehicles (FCEVs) benefit from lower GST rates of five percent and 12 percent, respectively, with no additional cess.
While the small ICE cars are expected to be shifted to the 18 percent slab, the larger passenger cars could be pushed into the newly proposed 40 percent bracket. Whether additional cess will be retained is not clear.
“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,” an official at Mahindra & Mahindra said.