WHAT THE CARMAKERS SAY

The automotive industry will be the biggest beneficiary of a successful GST implementation with imminent price cuts across segments, including SUVs, luxury cars and bigger sedans.

Manufacturers like Mercedes-Benz, Audi, BMW and JLR have cut prices to the tune of ` 11 lakh based on their models. Although the mass-market-focused Hyundai has introduced ‘price protection’ on its product range, it will pass on to all June buyers any price benefit that may occur post GST based on tax differences. Most of that will involve its SUV range featuring Creta, Tucson and Santa Fe.

“We will not just compensate customers, but also support our dealers on their leftover inventory. We are not cutting production, but going for ‘price protection’ across our range to maintain transparency and trust in the market,” Rakesh Shrivastava, Hyundai Motor India Director for sales and marketing, told Business Today.

Companies are now rationalising stocks to keep the inventory levels low. Market leader Maruti Suzuki will take advantage of its biannual maintenance shutdown, starting during the second half of June, to control its inventory build-up till the time the GST comes into force. Toyota will be streamlining its stock as well as its most profitable models – Innova and Fortuner – are likely to witness price cuts on lower tax. The company also plans to pass on the benefits to its customers.

The industry, which took nearly a quarter to recover from the impact of demonetisation and recovered considerably in March this year, is expecting operations to normalise by September, when the festive period starts.

“GST will have its own woes as a lot of operations beyond manufacturing, right from sourcing and vendors’ input credit will need to be adjusted. Also, some clarity on the hybrids, which are clubbed with luxury cars at 15 per cent additional cess, will help the industry to streamline its operations faster,” says N Raja, Director of Marketing and Sales at Toyota Kirloskar Motor Pvt. Ltd.