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The impact of GST speculation on the sales of auto firms

The largest car maker in the Country, Maruti Suzuki India, has posted a 1.2% increase in the domestic sales in the month of June. In contrast, Hyundai, Tata Motors and Mahindra reported a fall in sales during June, due to the speculations of the GST tax structure. Maruti Suzuki India mentioned that it had sold about 93,263 units in June 2017 as compared to 92,133 units in June 2016. Although the sales of Alto and WagonR declined by 7.9% to 25,524 units in June 2017 from 27,712 in June 2016. The company mentioned that the sales of compact models which consist of Swift, Dzire, Estilo and Baleno have increased to 1.3%, which is 40,496 units in June 2017 as compared to 39,971 units in June 2016. Further, utility vehicles which include Ertiga, Brezza and S-Cross saw an increase in sales by 43% to 13,879 units in June 2017 as compared to 9,708 in June 2016. Vans, which include Omni and Eeco saw a dip in sales by 6.7% to 9,208 units in June 2017 as compared to 9,874 in June 2016. 

Hyundai Motor India, another manufacturer of automobile has also reported a decline of 5.6% in its domestic sales. It sold 37,652 units in June 2017 and it had sold 39,807 units in the month last year. The reason behind the decline in sales is the market which is fuelled with various speculations regarding the impact of the GST. The auto industry expects a positive demand in the coming months, after the rollout of GST. Tata Motors, another manufacturer has reported a decline in the domestic passenger vehicles due to the mixed reactions towards GST. The sales of the passenger vehicles for Tata Motors in June 2017 stood at 11,176 units, which is 10% lower from the sales of 2016. For 2016, the sales were 12,482 units. Tata Motors mentioned that this decline in sales is seen as temporary and they expect a revival after the implementation of the GST. The auto companies are expecting an increase in sales in the coming quarters, which will match upto the reported sales and growth figures of 2016. Due to various speculations about GST, the companies had to bear the burden of a decline in the sales.

 

Mahindra & Mahindra has also reported a 3% decline in the domestic sales at 33,861 units in June 2017. Exports of the company went down at 54%, which stood at 1,855 units in June 2017 as compared to 4,020 units in June 2016. Further, the sales of passenger vehicles which include Scorpio, Xylo, Borelo and Verito declined by 5% and stood at 16,170 units in June 2017 as compared to 17,070 units in June 2016. However, the sales of commercial vehicles were up by 12% at 15,131 in June 2017 as against 13,538 in June 2016. Mahindra & Mahindra mentioned that the company is focusing to minimize channel stocks in order to reduce the transition loss on account of the implementation of GST. 

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