GST gives good growth momentum to car sales in July

Automobile sales in July saw a huge surge in sales due to the implementation of GST and higher wholesale sales due to stocking at dealership level.

Cars parked in parking lot. Photo: Pixabay

Key highlights:

Maruti Suzuki led the market with a strong growth of 22.4% in domestic sales

Tata Motors posted a 10.23% growth in passenger vehicle sales

GST pushed sales during the month due to dealership restocking

Car manufacturers in July registered a large growth in sales across segments in the first month post the implementation of the goods and service tax (GST). This was chiefly due to sales at the wholesale level as dealerships restocked on vehicles. Price reductions due to GST also drove sales during the month of July.

Top car manufacturers such as Maruti Suzuki, Tata Motors, Mahindra & Mahindra, Ford India, Honda Cars, Hyundai Motor, Volkswagen and Toyota Kirloskar Motor saw a good growth in car sales during the month.

The largest car manufacturer in India, Maruti Suzuki, led the market with a strong growth of 22.4% in domestic sales as it grew to 1,54,001 units as against 1,25,778 units in the same month last year.

Other companies such as Tata Motors, Mahindra, Ford India and Honda Cars India also registering double digit expansion in domestic market sales.

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Maruti Suzuki's growth was driven by compact segment - comprising Swift, Estilo, Dzire, Baleno and Ignis - which saw a 25.3% increase to 63,116 units in July as against 50,362 units in the same month last year.

Last month, sales of mini segment cars, including Alto and WagonR, went up 20.7% to 42,310 units, from 35,051 in the year-ago month, MSI said in a statement.

Tata Motors said its passenger vehicles sales in the domestic market grew 10.23% to 14,933 units last month as against 13,547 in July last year.

There was an an improved customer buying sentiment post GST, Tata Motors President, Passenger Vehicles Business Unit, Mayank Pareek said.

Ford India also reported a rise of 18.96% in its domestic sales at 8,418 units last month as against 7,076 units in July last year.

Stating that there was administrative challenges associated with the introduction of GST in July, Ford India President and Managing Director Anurag Mehrotra said, adding that going ahead there will be short-term headwinds associated with GST and rising input costs.

"We believe a good monsoon, conducive financing rates and consumer confidence during festival season will provide a good impetus for the industry," he said.

Utility vehicles major Mahindra saw a 13% increase in its domestic sales at 39,762 units last month compared to 35,305 units in July 2016.

A good monsoon, successful GST rollout and a good run-up to the festive season gives the company confidence of achieving robust growth in second quarter, M&M President Automotive Sector Rajan Wadhera said.

Honda Cars India Ltd (HCIL) posted a 21.74% increase in its domestic sales at 17,085 units in July. It had sold 14,033 units in the same month last year, Honda Cars said.

The country's second largest carmaker, Hyundai Motor India reported a 4.38% increase in its domestic sales at 43,007 units in July. The company had sold 41,201 units in July 2016.

German auto major Volkswagen today reported a 10.5% increase in sales in India at 4,753 units in July.

The company had sold 4,301 units in the same month last year.

The positive growth during last month is attributed to the strong product line-up led by the recently launched Tiguan, he added.

Commercial Vehicles in July

In the commercial vehicles segment, Tata Motors said its domestic sales were up 15% at 27,842 units last month following ramp-up of BS-IV production across segments.

"Passing on the benefits of GST to consumers by reducing the prices of its vehicles across all commercial vehicle segments has resulted in improved consumer sentiments," Tata Motors Head Commercial Vehicle Business Unit Girish Wagh said.

Hinduja Group flagship firm Ashok Leyland reported a 14.19% increase in total sales at 11,981 units in July as against 10,492 units in the same month last year.

Commercial vehicles maker VE Commercial Vehicles reported a marginal decline in total sales at 4,359 units in July.

The company, a joint venture between Volvo Group and Eicher Motors, had sold 4,374 units in the same month last year, VE Commercial Vehicles (VECV) said in a statement.

The July 2017 sales figure includes 4,316 units of Eicher brand and 43 units of Volvo brand.

Eicher branded trucks and buses recorded total sales of 4,316 units last month as compared to 4,315 units in July 2016.

Two-wheeler sales in July

In two-wheeler segment, market leader Hero MotoCorp reported a 17.13% increase in sales at 6,23,269 units in July as against 5,32,113 units in July 2016.

Despite sluggish sales for the first few days of the month due to the transition to the GST, the company said it was able to clock a robust six-lakh plus sales in July.

Similarly, Honda Motorcycle and Scooter India (HMSI) also posted a 19.96% increase in total sales at 5,44,508 units last month. It had sold 4,53,884 units in the same month in July 2016.

TVS Motor Company saw its total sales in July grow by 9.34% at 2,71,171 units as against 2,48,002 units in the same month last year.

Royal Enfield reported a 20.75% increase in total sales at 64,459 units as compared to 53,378 units in the same month last year.

Tractor sales in July

Farm equipment maker Escorts Ltd said its domestic tractor sales during the month were at 5,275 units as against 3,953 in July last year, a growth of 33.4%.

On the other hand, Mahindra registered a 7.48% increase in its domestic tractor sales at 17,682 units as against 16,452 units in the year-ago month.

(With inputs from PTI)

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