“Sales during the shraadh period are negligible and since the period ends on September 28, the entire month is likely to be a complete washout,” a Maruti Suzuki dealer said.
By Pritish Raj
Cars and two-wheeler sales are set to fall to another all-time low in September, as dealers and experts believe speculations over a GST cut has further dampened demand, and consumers have been holding purchases in anticipation of a better deal.
Dealers FE spoke with said while expectation of a GST is keeping buyers away, demand during the 15-day shraadh period starting September 13 will also be subdued. Traditionally, among Hindus, the two weeks that constitute shraadh are considered inauspicious to buy anything, from gold to cars to property. “Sales during the shraadh period are negligible and since the period ends on September 28, the entire month is likely to be a complete washout,” a Maruti Suzuki dealer said.
Following a long-standing demand of the auto industry to cut GST from 28% to 18% to arrest a year-long downturn in sales, finance minister Nirmala Sitharaman last month said she will take the matter to the GST Council, which is slated to meet on September 20.
Poor retail sales in September would mean manufacturers will continue sending less units to the dealers as inventory across segments is higher than normal. Guenter Butschek, CEO and managing director at Tata Motors, last week said while GST cut is extremely important to combat the slowdown, it’s more important that the government clarifies if there will be a cut or not.
“If it is possible, let us know here and now, loud and clear, because the customer expectation this time is high and it is also a reason we have seen lots of booking cancellations,” Butschek said, adding that showrooms are empty because the customer is expecting a better deal post the GST cut.
A Tata Motors dealer said expectations of a GST cut is a major reason why August sales were so poor. “While customer walk-ins have increased, queries have risen over the tax cut, which clearly indicates that purchases are being postponed,” the dealer said.
Automobile sales across segments witnessed its sharpest-ever decline in August, dropping 23.55% year-on-year (y-o-y), as poor retail sales due to weak consumer demand continued to leave dealers saddled with high inventory. Passenger vehicle (PVs) despatches, which fell for the tenth consecutive month, declined 31.57% y-o-y in August, the worst-ever since Society of Indian Automobile Manufacturers (SIAM) started recording wholesale vehicle sales data in 1997-98. Two-wheeler volumes fell 22.24% y-o-y to 15,14,196 units, also the sharpest-ever decline as manufacturers including Hero MotoCorp and Honda Motorcycle continued to cut production to control inventory, which is at over 60 days.