Tax rates on automobiles in the upcoming GST and monsoon will be crucial factors which will influence the rate of growth of the industry in the new fiscal, according to Toyota Kirloskar Motor. The company said rising commodity prices are beginning to put pressure and it will take a review of the situation to consider pricing changes after April.
“The key factors for auto industry in the new fiscal is at what rates vehicles will be taxed under the GST and how monsoon will be this year,” Toyota Kirloskar Motor Director and Senior Vice-President, Sales and Marketing, N Raja told PTI. He was responding to a query on what could be the major challenges faced by the auto industry faced a lot of speed breakers in last fiscal.
Elaborating, Raja said: “If the automobiles are taxed similarly under GST as it is today, it will not make much of a difference.” However, if they are taxed more, prices will have to go up and it will definitely have an impact on demand, he added.
The GST Council has already decided on a four-tier rate structure of 5, 12, 18 and 28 per cent and a cess on the peak rate for demerit and luxury goods.
The Lok Sabha has also approved four supplementary legislations — Central GST, Integrated GST, Union Territory GST and Compensation Law. On monsoon, Raja said already reports of below normal monsoon have started to come, while the country is witnessing a heat wave.
“If the monsoon is not normal, it will have an impact on rural demand and even urban demand could also be affected,” he said. In 2017-18, the passenger vehicles segment is expected to grow in single digit after witnessing 4-5 per cent growth in 2016-17, Raja said.
In 2016-17, TKM registered 12 per cent growth in sales riding on its Innova Crysta, which sold close to 75,000 units in less than a year of launch.
On commodity prices, he said: “We are challenged on that front. Items like steel and copper have seen rise in prices.” When asked if the company would pass the burden to customers, he said: “At the moment we are reviewing it. By the end of April, we will exactly know what steps we need to take.”