The Nifty Auto index declined for the second consecutive session on Wednesday, slipping 1.3 percent, as profit booking weighed on sentiment. It emerged as the top laggard among sectoral indices during the day.
The two-day fall comes after four straight sessions of gains, driven by strong buying interest following the GST Council’s decision to cut taxes on several categories of vehicles.
Mahindra & Mahindra dropped 2.36 percent, while MRF fell 2.69 percent. Other major losers included TVS Motor Company, Bajaj Auto, Maruti Suzuki India and Hero MotoCorp, which shed up to 2 percent.
The decline was seen after a Bloomberg report said China’s BYD Co. is preparing to ramp up its presence in India, supported by easing diplomatic ties. The electric vehicle major has begun securing visas for senior managers and engineers to restart training programmes and service machinery at its southern India facility.
The company is also weighing a launch of its Atto 2 compact electric SUV in India early next year, which would be its cheapest offering in the market and a direct challenger to local players like Mahindra & Mahindra and Tata Motors.
Meanwhile, Vietnamese automaker VinFast Auto has announced the rollout of its VF6 compact SUV in India, priced from around Rs 16 lakh.
Adding to the uncertainty, industry sources told Moneycontrol that several car dealers are exploring legal options to claim unutilised cess credits. They may approach courts after September 22, when the revised GST rates take effect, to seek refunds of taxes already paid.
Car dealers seeking legal advice as new GST rates threaten refund of tax credits
The car dealers who have already purchased vehicles from manufacturers at the current GST rate (28% plus cess) won’t be able to claim any credit on the cess paid after September 22. Industry estimates suggest that the cess paid, which can’t be claimed later, is to the tune of Rs 2,500 crore.
Hence, car dealers are seeking a remedy by way of a mechanism to ensure refunds of the cess paid. Government officials have told Moneycontrol that discussions are underway in the Central Board of Indirect Taxes and Customs (CBIC) to provide for a similar mechanism.
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