GST impact: June may see muted growth in car sales, decline unlikely

Car makers are unlikely to see a double digit growth in volumes during June but a YoY decline is ruled out even as dealers may end up taking some hit in transition to GST. This because last year June had a low base caused by a decline in volumes of Maruti Suzuki, which sells every second car in the country.

In June 2016, the industry sold 223,454 vehicles (cars, utility vehicles and vans) with a growth of just 2.6 per cent. Maruti’s volume had declined over ten per cent in that month to 92,133 units. Maruti sold 130,248 units in May this year. Even if it reports a sequential decline in June compared to May (owing to a week’s maintenance shutdown), it is certain to report a healthy growth over last June. The industry sold 251,642 vehicles in May this year and even with some sequential decline, a growth of flat performance is more likely. Another reason for low dispatches would be planned maintenance shutdown by some players including Maruti.

Hyundai, the second largest player, is confident of sustaining growth. “We are seeing a heightened level of interest from customers who are finding value in the attractive promotional offers, where benefits are comparable to year end deals. The customer confidence has gone up as we are assuring post GST prices,” said Rakesh Srivastava, director (sales & marketing) at Hyundai, the second biggest player in domestic car market with a market share of over 16 per cent.

Car makers, including luxury ones, sweetened discount offers this month to retain buyers’ interest in purchases as prices in most categories, except entry level, are slated to come down from July 1 owing to GST.