Car sales register strong growth in GST era as new models, price cuts push demand

NEW DELHI: The first month after the implementation of GST saw carmakers report healthy numbers as new models continued to go strong while companies built fresh inventory after clearing stocks before the implementation of the new tax regime.

The price cuts announced by companies due to lower duty in GST also helped build volumes even as demand for hybrids slowed down after their prices went up substantially as the government slapped higher duty on them.

According to wholesale numbers released by the manufacturers, July opened on a strong note, even though monsoon months are generally seen as sluggish for new vehicle sales.

Maruti reported a 22% growth+ in its volumes as models such as Vitara Brezza mini SUV, Baleno hatchback and old warhorse Swift compact continued to go strong. The company, which recently drove in a refurbished version of the Dzireentry sedan, has started production from its new plant in Gujarat (owned by parent Suzuki) as it looks to bring down the waiting list on some of its models.

Hyundai, that follows Maruti in the market, however, had a relatively weaker month as it grew only 4% in July. The company, which will be launching the new-generation of the Verna sedan later this month, sold 43,007 units in July.
For Toyota, July was a strong month, especially after it reported very weak sales in June as its wholesale was impacted by the incoming GST. In the GST era, the company’s sales were up 43% as it sold 17,750 units in July, a large part of these comprising of the Innova MPV. Toyota had reduced prices of the Innova and the Fortuner SUV substantially from July that helped bring in more customers.

However, it sought reinstatement of lower duty for hybrids, saying the higher prices had impacted the demand for the vehicles. “The customer demand for our Camry Hybrid has seen a significant fall owing to the price hike as per applicable tax under GST framework. We hope the Government would reinstate the preferential (lower) tax rate in favour of clean and green technologies such as strong hybrids, similar to pre-GST era,” said N Raja, Marketing and Sales Director at the company.
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