The passenger vehicle sector in India is experiencing a surge in sales, driven by lower GST rates. The implementation of GST 2.0 has resulted in increased consumer activity and improved sales figures for auto companies. Showrooms of prominent brands like Maruti Suzuki, Hyundai, and Mahindra are seeing a rise in customer visits, and bookings have seen a significant jump compared to prior weeks, increasing nearly fourfold.
This rise in demand is attributed to strategic inventory management and anticipated price reductions. Prior to the GST adjustments, companies deliberately managed their stock levels, while dealers focused on clearing existing inventory. The new GST rate of 18% on small cars and sub-4 meter SUVs (down from the previous 28% plus cess) is directly translating into savings for consumers, ranging from 8.5% to 10%.
The festive period, encompassing Navratri and the upcoming Dhanteras-Diwali celebrations, has amplified this surge in sales. Initial figures from Navratri indicate strong customer interest, with sales projections significantly exceeding last year’s figures. There is potential for sales to double if supply chain bottlenecks and financing issues are addressed promptly.
Maruti Suzuki reported daily bookings increasing from 10,000 to 15,000 units, and delivered 30,000 vehicles on the first day of Navratri. Tata Motors delivered 10,000 vehicles at the commencement of the festive season, highlighting the broad impact of the GST rate reductions across the industry.