Auto sales see a 7 per cent fall, as customers wait GST cut rate decision

New Delhi: Domestic passenger vehicle sales have seen a drop by 7.3 per cent year-on-year in August to 330,000 units, mostly because consumers are waiting for the upcoming decision of the GST Council on September 4th on reducing the tax on automobiles from 28 per cent to 18 per cent. Maruti Suzuki, the biggest carmaker in India, saw a drop of 7.5 per cent Y-o-Y with just 144,145 units sold. 

Maruti officials have themselves noted that there was good traction till the middle of the month in bookings. Prime Minister Narendra Modi, in his Independence Day speech, had said that the GST structure would be made efficient with just two main tax slabs of five per cent and 18 per cent, and a higher 40 per cent for luxury or harmful goods. This is going to replace the four-tier structure that is currently in place. 

When the GST council meets on September 3rd and 4th on rate rationalisation, it is expected that Automobiles, which come under the 28 per cent slab, will come down to 18 per cent. The GST reform is expected to turn around the sales.

Partho Banerjee, senior executive (sales and marketing) at Maruti Suzuki, noted that in August 2024, the sales were of 356,113 units, which this year went to 330,000, around 5,000 units plus or minus. In fact, a lot of the brands decided not to push vehicles to their dealers, added Mr Banerjee. 

Due to the monsoon, the auto sector too has seen a dip in sales in rural demand, especially in the entry-level and utility vehicles. There has been a dip in sales from Mahindra and Mahindra as well, falling nine per cent Y-o-Y to 39,399 in August. 

Chief executive officer of the auto division of Mahindra and Mahindra, Nalinikanth Gollagunta, was quoted by Business Standard as saying that since the final GST announcement is coming forth, the brand had decided to bring down the wholesale billing to reduce the stock being sent to the brand’s dealers. He further said that the GST rationalisation would, in fact be accelerate sales during the festive season. 

Even in two-wheelers, Bajaj Auto and Honda Motorcycle and Scooter India have recorded a fall in August. TVS Motors in the domestic market saw an increase of 28 per cent Y-o-Y, with the numbers reaching 368,862 units. In terms of vehicles, only Toyota has seen a Y-o-Y increase of 2.5 per cent with 29,302 units sold. Hyundai sold 44,001 units and saw a drop of Y-o-Y per cent by 11.2 per cent, while Tata Motors had a 7.1 per cent Y-o-Y drop with a sale of 41,001 units.