India's automotive sale in expected to rebound strongly towards the end of September after the end of the Shraddh period and as the lower GST rates kick in, Federation of Automobile Dealers Associations (FADA) has said on September 8, while adding that several automakers have reduced prices immediately, thus allowing buying to book cars for deliveries on auspicious days.
Shares of leading auto makers are sharply higher on September 8, and Tata Motors is leading the pack of gainers with a 3 percent rise, followed by M&M, Bajaj Auto, Hero Moto and Maruti shares which are up between 1-2 percent.
The total vehicle retail sales in August reached 1.96 million units, which is higher by 2.8 percent on year. FADA added that an uneven supply of high-demand passenger car models too added to the pressure of sales during August, which saw buyers' interest around Onam and Ganesh Chaturthi. For the April-August period, retail sales of vehicles reached 10.5 million units, showed FADA's data, which is higher by 2.9 percent on year.
Read More: Festive cheer: GST cuts, attractive car loans to make vehicles more affordable
During August, festive enquiries were strong, said FADA, and buyers had deferred purchases to September due to the announcement of new and lower GST rates. The two-wheeler segment saw a growth of 2.18% on year in August, helped by festive enquiries around Onam and Ganesh Chaturthi, however, excessive rains in parts of India and the GST reforms deferred conversions, the association said. The three-wheeler segment saw a de-growth of 2.26 percent during August. However, the PV segment saw an uptick of 0.93 percent on year for bookings in August, but the growth was checked by GST and rains. The association said the inventory levels are muted at around 56 days. The robust monsoon coverage has helped tractor sales in August, which are higher by over 30 percent on year due to improved rural liquidity and better crop outlook. While the construction equipment segment saw a 26 percent de-growth compared to last year, CV sales saw a rise of 8.55 percent on e-commerce growth and strong replacement demand.
FADA's President CS Vigneshwar hailed the GST reform as a 'historic, people-first reset', which brings clarity in taxation, and lowers household costs, and improves industry's competitiveness.
"The resilience of India's auto retail industry, combined with the once-in-a-generation reform of GST 2.0, positions the sector for a robust festive season. Dealers remain confident that September will herald the beginning of an accelerated growth cycle, powered by both policy tailwinds and festive fervour," CS Vigneshwar said.
Major automakers have announced significant price cuts across their model line-ups following the government’s decision to rationalise GST rates on automobiles. Customers can now expect savings ranging from Rs 60,000 on entry-level cars to over Rs 3 lakh on premium SUVs. The sharpest reduction is for small cars, still the backbone of India’s passenger vehicle market. Petrol, CNG and LPG cars with engines up to 1200cc and length not exceeding four metres will now attract 18 percent GST, down from 28 percent.
FADA has also sought a meeting with Finance Minister Nirmala Sitharaman to address concerns over Rs 2,500 crore levied in compensation cess on car companies.
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