Carmakers sold more vehicles in May, so did two-wheeler manufacturers, there was no such luck for medium and heavy truck and busmakers though, as sales dropped for the second-straight month.
The latest numbers released by Society of Indian Automobile Manufacturers shows a 33 percent drop in heavy and commercial vehicle sales last month, as pre-buying before the Bharat Stage-IV norms came into force from April 1, and as the manufacturers said, a shortfall in new emission norm compliant fuel injectors. Uncertainty over Goods and Services Tax (GST) implementation has also been cited as a reason for the drop in sales.
The effect of GST is likely to result minor changes to prices of small cars and two-wheelers, said Vishnu Mathur, Director General at SIAM. Depending on individual state GST rates, these prices were expected to either rise or fall slightly, he said.
SIAM, too, was concerned about hybrid vehicles being taxed in the highest category of 28 percent, and 15 percent cess. Mathur said SIAM had sent requests to the finance ministry to reconsider taxation slabs for hybrid vehicles, as it was done for electric vehicles, which would be taxed at 12 percent.
The GST Council, in its next meeting on June 11, is likely to take up the issue to reconsider tax slabs for hybrid vehicles, Mathur said. SIAM has sought a reduction in tax rates for hybrid vehicles to 18 percent, and for fuel cell-powered vehicles to 12 percent.
Also Read: Why Sales Fell? It's More Than What Truckmakers Say
Passenger car sale rose 4.8 percent to 1,66,630 units, reflecting the underlying stability in urban consumer spending in the economy. The rise was driven by the popularity for compact sports utility vehicles, Mathur said.
Two wheelers remained popular with sales rising 11.9 percent to 16.9 lakh vehicles. Exports grew 8.9 percent to 3,29,068 vehicles over the year.
In terms of an outlook on the remainder of the fiscal, Mathur said he expected positive outcomes, taking into consideration the Indian Meteorological Department's prediction of normal rains, and also a pick up in infrastructure-related activity.
The month of June, however, was expected to feature a minor blip on account of the wait for rollout of GST and the revision of tax rates.
Shares of Tata Motors Ltd. and Ashok Leyland Ltd., makers of medium and heavy commercial vehicles, remained subdued since market opening.
Shares of car makers such as Maruti Suzuki Ltd. and Mahindra & Mahindra Ltd. traded higher by 1.9 percent and 0.8 percent, respectively.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
