Auto sector ushers in price cuts; June sales witness slowdown

 NEW DELHI: India’s largest carmaker Maruti Suzuki reduced prices of some of its vehicles by 3% on Saturday, passing on the benefit of lower taxes for certain segments of vehicles under the GST regime.

The GST unifies the $2 trillion economy into one of the world’s biggest common markets. The biggest cuts will be in Maruti Suzuki’s petrol cars. “The rate of reduction varies across locations depending on VAT rates applicable prior to GST… We have passed on the entire benefit of GST rates on vehicles to its customers,” a statement by the company said.

The discount will translate into a maximum of ~23,400, which is the case for a top petrol trim of Ciaz sedan. But Maruti’s hybrid vehicles — cars that use an electric motor in tandem with the regular diesel engine —became expensive by at least ~1 lakh as the tax rates on them went up from 12% to 28%, in addition to a 15% cess. “Owing to withdrawal of tax concessions on mild hybrid vehicles, the price of Smart Hybrid Ciaz Diesel and Smart Hybrid Ertiga Diesel has increased,” the company said.

SUVs and luxury cars too became cheaper. BMW, Mercedes-Benz, Jaguar Land Rover and Audi started passing on the GST benefits to the customers, even before the new tax regime came into effect.

Some of their models became cheaper by as much as ~10 lakh, the cost of a mid-size sedan.

But the biggest price change in the post-GST era would be that of the BMW i8. The hybrid supercar now costs ~2.62 crore, becoming costlier by ~48 lakh.

JUNE SLOWDOWN

Most automakers faced a tough June as prospective buyers put off their purchase plans till the GST rollout. That prices would be cut for many segments of vehicles was known as early as May when the government decided the tax rates for the sector. “The uncertainty over the GST implementation with regard to the passenger vehicles has impacted the retails as the customers are postponing their plan of purchasing vehicles post-GST rollout,” N Raja, Toyota Kirloskar Motors’ director and senior vice-president (Sales and marketing), said.

Toyota saw an 85% drop in sales. Similarly, Hyundai and Mahindra & Mahindra saw 5.6% and 3% drops. Maruti Suzuki posted a mere 1.2% growth in domestic sales.

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