July Auto Des­patches Up 13.3%, but Cess on Big Cars a Worry

In­dus­try gear­ing up for fes­tive sea­son; prospects favourable due to good mon­soon

The Economic Times - - Companies: Pursuit Of Profit - Ke­tan.Thakkar @times­group.com

Mumbai: Au­to­mo­tive man­u­fac­tur­ers dis­patched 13.3% more ve­hi­cles to deal­er­ships in July from a year ear­lier, aided by re­plen­ish­ment of stock post im­ple­men­ta­tion of GST.

Num­bers are likely to look up this month as well for most seg­ments of the in­dus­try, with com­pa­nies gear­ing up for the up­com­ing fes­tive sea­son and the fun­da­men­tals look­ing favourable with good mon­soon, low in­fla­tion, at­trac­tive in­ter­est rates and benign fuel prices.

But the re­cent de­ci­sion to in­crease the cess on big­ger cars and util­ity ve­hi­cles may slow down the growth mo­men­tum in the pas- sen­ger ve­hi­cle mar­ket, where the sit­u­a­tion doesn’t look as rosy as the July whole­sale data sug­gest, in­dus­try ex­ec­u­tives said.

In July, to­tal au­to­mo­tive sales, in­clud­ing of cars, SUVs, trucks and two-wheel­ers, to­talled 2.07 mil­lion units, data from the So­ci­ety of In­dian Au­to­mo­bile Man­u­fac­tur­ers showed on Fri­day. In the pas­sen­ger ve­hi­cle seg­ment, sales rose more than 15% to 2.98 lakh units, the high­est ever for a month. The mo­tor­cy­cle mar­ket grew nearly 14%, with good rains this year boost­ing de­mand in ru­ral In­dia. Even in com­mer­cial ve­hi­cles, sales ex­panded in dou­ble dig­its, led by higher dis­patches of light com­mer­cial

ve­hi­cles. Th­ese are all whole­sale num­bers, as com­pa­nies don’t re­port re­tail sales. Vishnu Mathur, the SIAM di­rec­tor-gen­eral, said th­ese num­bers alone may not re­flect the real pic­ture, as the in­dus­try re­sorted to de-stock­ing and stock­ing in June and July, re­spec­tively.

The in­dus­try is in a fix now due to the move to in­crease the cess on ve­hi­cles that are longer than four me­tres. The GST Coun­cil has ap­proved a pro­posal to in­crease the cess to 25% from the 15% cur­rently levied on pas­sen­ger ve­hi­cles on top of GST at 28%. The de­ci­sion, though, has yet to be im­ple­mented.

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