GST impact: Carmakers slip into the slow lane

Maruti Suzuki, the country’s largest carmaker, reported only a 1.25 per cent y-o-y increase in wholesale volumes to 93,263 units during the month, which is the lowest for the company in two years.

By: ENS Economic Bureau | New Delhi | Published: July 2, 2017 3:05 am
gst, gst and cars, gst impact, maruti suzuki, gst news, gst launch, india news, indian express news Apart from Maruti, leading carmakers Hyundai, Mahindra and Mahindra and Toyota have witnessed a decline in their wholesale volumes.

The top automobile companies in the domestic market reduced their wholesale dispatches in June as a result of the prevailing uncertainty regarding the impact on retail sales after the implementation of the goods and services tax (GST). Dealers were also reluctant to increase inventory before the new tax regime kickstarts, and gave huge discounts during the month to substantially reduce the existing inventory.

Maruti Suzuki, the country’s largest carmaker, reported only a 1.25 per cent y-o-y increase in wholesale volumes to 93,263 units during the month, which is the lowest for the company in two years. As a carmaker, the company always matches the target of one lakh wholesale dispatches per month. Volumes in the mini segment, which grew in the first two months of the fiscal, declined by 7.95 per cent y-o-y, while numbers in the utility vehicle segment increased by 43 per cent y-o-y. The volumes of Ciaz also increased by 41 per cent y-o-y to 3,950 units.

Apart from Maruti, leading carmakers Hyundai, Mahindra and Mahindra and Toyota have witnessed a decline in their wholesale volumes. South Korean carmaker Hyundai, the second-largest carmaker in India, reported a 5 per cent decrease in volumes to 5.6 per cent y-o-y to 39,807 units.

“In a challenging market fuelled with speculation on the GST tax structure, Hyundai registered the highest-ever half year domestic sales at 2,53,428 units with a growth of 4.1 per cent on account of strong acceptance of our brands Grand i10, Elite i20 and Creta in the pre-GST business environment. We expect a positive demand post the successful implementation of GST in the coming months, as the industry will witness heightened level of customers’ interest in a seamless unified single market,” said Rakesh Srivastava, director, sales and marketing, HMIL.

Mumbai-based utility vehicles manufacturer Mahindra and Mahindra also resorted to the strategy of controlling the dealer inventory, as a result of which the wholesale volumes declined by 5 per cent y-o-y to 16,170 units in June. Apart from GST, the lack of demand for new products including TUV300 and KUV100 is another reason for the decline in sales.

“Our focus has been to minimise channel stocks to reduce the transition losses on account of GST implementation. We are closely observing GST and strongly believe that once we tide over the initial uncertainties, GST is set to usher in a new era for the economy in general and the automotive industry in particular,” said Rajan Wadhera, president, automotive sector, M&M. Due to the prevailing uncertainty in the market, Japanese car maker Toyota also reduced its domestic dispatches by 85 per cent y-o-y to 1,973 units. FE

For all the latest Business News, download Indian Express App

    Live Cricket Scores & Results