Festive September fires up car sales amid cess brake

Passenger vehicle industry is expected to report strong growth for September due to the festive season and introduction of new models.

During July and August, car sales grew by nine per cent and 12 per cent respectively after reporting a modest four per cent in Q1 of this fiscal. Utility vehicles maintained strong sales growth 36 per cent and 20 per cent during these months, mainly due to compact SUV sales.

Despite additional compensation cess in GST announced by the government last month, leading car makers, who have announced their sales for September, have reported strong numbers for the month.

Top car maker Maruti Suzuki has reported 10 per cent growth in its PV sales at 1.5 lakh units during September. “Strong demand for existing models and new models fuelled the growth during this festival month,” RS Kalsi, Senior Executive Director – Sales & Marketing, Maruti Suzuki India, told BusinessLine .

Second largest car maker Hyundai achieved a record sales of 50,028 units in September, a growth of 17 per cent, aided by its new mid-size sedan Verna, which fetched sales of over 6,000 units.

Tata Motors, which is now sporting young portfolio of cars, has recorded 18 per cent increase in its PV sales at 17,286 units during September and that was the highest sales since November 2012. Its just-launched compact SUV Nexon has also brought in incremental growth for the company.

To make most of the festive season, Maruti is also introducing a few limited editions of its existing models. It has just unveiled a new variant of its SUV S-Cross.

“We have seen a good sales momentum due to Navratri and Durga Pooja celebrations for many models that include WR-V, City and Jazz. There were some improvements in sales of BR-V as well. We hope we will report double growth for September,” said Jnaneswar Sen, Senior Vice-President, Sales and Marketing, Honda Cars India Ltd.

However, players like Toyota, which had a good run during July and August, were feeling the pinch of additional cess.

The company, which announced its September month sales on September 28, has seen a low single-digit growth. Toyota revised the prices September 12 in line with the cess hike which actually reflected the prices in the pre-GST period. However, N Raja, Director & Sr Vice-President, Sales & Marketing, Toyota Kirloskar Motor, pointed out that cess hike had minimal impact and the festive season brought in positive growth in the sales.

“Despite the spike in customer demand, we had to close the month early by September 28, leading to lesser number of production days,” he added.

“The total tax incidence (GST + cess) on mid and large-sized cars after new cess rates has increased by just 0.5 per cent if compared to the pre-GST rates, while the same for the utility vehicle is down by 1.5 per cent,” according to Shrikant Akolkar, Analyst-Automobiles at Angel Broking.

Lower interest rate environment, revival in rural demand and new model launches will augur well for the PV industry to maintain a positive growth in the near term.

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