If there is any industry to have fully capitalised on the GST, it has to be the automotive industry. Starting with the pre-GST stock clearance that started with the German Luxury car marques’ in June and continued all the way to Post-implementation discounts from almost all major players across the spectrum. Mahindra and Mahindra have already announced some discounts in across their range, ranging from a 1.4% rebate on their smaller vehicles to a more significant 6.9% on their Utility Vehicle range. However, Mahindra who is the only Indian manufacturer to currently have an electric vehicle in their range, and have plans to broaden that horizon, have expressed doubts in the long term progress to that end.
Speaking on the GST, Mr Pawan Goenka said that the transition to GST from the current tax slab has been “surprisingly smooth” he added further that the growth spurt that the industry was partially fueled by the restoration of normal inventory at dealerships as well as the price reductions being offered across brands. He added that while that may be the case in the mainstream, the council lead by Mr Arun Jaitley stood firm on their high taxation of electric vehicles and hybrids, forcing those with future plans in the industry to have to rethink their strategy.
"In the short term, there is going to be inventory build up at dealers because the (pre-GST) inventory levels were lower than what the norm is. Inventory refill will happen in the month of July, August and then festive months of September and October," Goenka said.
Continuing to say that, "the transition has been surprisingly smooth" with just one supplier who wasn't ready on the first day.He said dispatches of automobiles and tractors from plants and spares from warehouses have started without any disruption.”
As far as Hybrids and all electrics go, Mr Goenka says that the added burden on electric vehicles has forced companies into a corner. Which would make it hard for someone to consider making the switch with no support from the centre? Adding that most players with aggressive growth plans in this field would be forced to reconsider.
Finishing his statement by saying, that Maharashtra has upped it road tax by 2% to account for the loss in Octroi which is something he hopes that other states don’t pick up on effectively negating the benefits of discounts that were synonymous with GST.