July has seen a decline in automobile sales despite significat price cuts by the companies after GST roll out.
Right before the implementation of GST, automobile sector had seen a great incline in the number of sales as the dealers tried clearing stocks with attractive offers. After GST was rolled out, there were significant changes in the prices of a majority of vehicles, however, that seemed to have left a negative impact on the sales of automobiles.
According to the senior executives working with the automobile companies, there has been a steep decline in automobile sales throughout the country. Though the figures still remain unclear, trends suggest that the figure might fall in the range of 30 to 50%. The range varies from state to state and manufacturer to manufacturer. Though, the figures of wholesale purchases have increased to a large extent, because of the clearance of stocks by the dealers just before GST rollout.
One of the top executives at Maruti Suzuki India stated that there was an advancement in automobile buying at the end of June. This took place after the dealers had introduced attractive offers in the wake of GST roll out. He also added that despite seeing a surge in sales, the dealers had resisted buying new stock at the end of June as they were unclear of the changing terms and conditions.
The present month, however, has seen a decline in the retail sales whereas, the wholesale buying has picked up as the dealers are looking to maintain the equity. The government had announced that it would not provide the benefit of input tax on the sales and purchases made before the GST rollout.
After the GST implementation, the prices of cars and bikes have gone below by up to 10%. However, the decline in prices hasn’t attracted an interest of the buyers yet.
Another senior executive of Hyundai Motors India said that 25-30% of their customers include the small traders and businessman. The disruption caused by GST for their businesses will take some time to settle and that is when the sales will be back on the normal track. A majority of the executives have termed it as a temporary state.