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
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.