Indian Automobile Market Remains Slow-Moving In June Owing to the Liquidation Of Stock, Ahead Of GST

Posted on: Jul-2017 | By: 9 Dimen | Automotive

In the overall process of GST implementation in the country, each and every sector that maintains inventory faced an issue related to liquidation of stockpiles owing to slow moving market. Consumers have been playing smartly to reap maximum gains out of their spending. This amendment has impacted the automobile sector from both the sides as some of the segments fall under those tax slabs that presently have low tax rates compared to previous one (post-GST).

The months before the GST introduction has been challenging for the businesses. The rollout of the GST forced various auto giants such as Toyota Kirloskar Motors to hold stocks so that dealers can clear up old inventory. This was the scenario with various automakers, which led to slow growth in Q1.

As per the report by SIAM, an industry body, the sales numbers of the PV declined by 11.21%, which is approximately 198399 units in June. It was 223454 units in the last year in the same month, if compared. On the other hand, there was growth in commercial vehicle segment by 1.4% (56890 units) and two-wheeler segment witnessed 4% growth (1527049 units).

Deputy Director General at SIAM, Sugato Sen said, in a statement, “It was a transition phase in June where dealers and companies were trying hard to liquidate the inventory. However, the rate is pretty cleared post-GST and now will try to jump out of the slump soon.”

Overseeing the overall sales of passenger, vehicles amid April-June in 2017 augmented by 4.38%, which was equivalent in the last year. Vans show a decline of 2.96% in the same period.

Commercial vehicle segment that is still in a recovery phase since the enforcement of BS-IV emission norms remained at declining stage and saw a drop of 9.08% in Q1 of the financial year 2017.

From the export viewpoint, the total automobile export spurred by 13.74% during the first quarter of 2018 financial year. Whereas, two-wheelers, passenger vehicles, and three-wheelers reported a growth of 14.75%, 13.79%, and 24.67%, respectively.

The introduction of GST has come out to be beneficial for some of the segments; for example, the luxury vehicle segment tax slab was reduced and company dominating this segment officially announced to pass on the benefits to the customers, which resulted in the drop in the prices.