Share of small cars in sales up after GST cut: Maruti's Partho Banerjee

The share of small car sales has soared past 22 per cent in the overall sales of Maruti Suzuki India, up from 16.6 per cent seen in the period before the GST rate cut this financial year, Senior Executive Officer (Marketing and Sales), Partho Banerjee, said on Tuesday.

 

While the announcement on goods and services tax (GST) rejig was made on September 3-- triggering a rush of bookings-- the lower rates came into effect starting September 22. MSIL had announced price cuts on its cars on September 18, which came into effect on September 22.

 

“We announced price cuts four weeks back. In this period, MSIL has received about 400,000 bookings, averaging 100,000 bookings per week -- the highest ever rate of bookings for the company,” Banerjee said during an audio press conference. Of these bookings, roughly 80,000 are for small cars.

 

The share of small car sales in India had been declining over the past several years. The key reasons were their soaring prices due to new safety and emission norms coupled with growing popularity of SUVs.

 

The share of small car sales in total MSIL sales has risen from 16.7 per cent in the April 1-September 21 period to 22.2 per cent in September 22-October 14 period, he said.

 

“This is a huge jump in small car sales. Our production team is even working on Sundays to meet the high demand,” he added.

 

Banerjee attributed the growth in small car sales to two-wheeler customers gaining confidence to step into car dealerships after the GST rate cut.

 

“We are seeing a lot of people with helmets visiting our showrooms,” he said.

 

From September 22 onwards, small cars (less than four metres in length with engines up to 1,200 cc for petrol and 1,500 cc for diesel) attract 18 per cent GST, down from 29-31 per cent earlier, including cess.

 

Under the new GST regime, larger cars (over four metres with engines above 1,500 cc and ground clearance above 170 mm) are now taxed at 40 per cent instead of the earlier effective 50 per cent. The Centre has also withdrawn the compensation cess.