August retail car sales, dispatches largely remain flat as industry awaits clarity on GST rate cut

The dispatches and retail sales of passenger vehicles have largely remained flat in August, compared to July, as both carmakers and consumers await the government’s verdict on reducing GST on cars, data from Vahan and carmakers show.

Maruti Suzuki India Limited , the country’s largest manufacturer of passenger vehicles, retailed 1,28,125 vehicles in August, according to data accessed from the Vahan portal. In July, it retailed 1,29,164 vehicles. According to the company, it dispatched 1,34,050 vehicles, including its Super Carry light commercial vehicle, in August to dealers, compared to 1,48,781 vehicles in July.

South Korean carmaker Hyundai Motor India Limited retailed 42,044 units in August, compared to 43,099 units in July. However, it dispatched 44,001 units to dealers in August, compared to 43,973 units in July. On a year-on-year basis, the dispatches slumped 11%.

This was also the case for Tata Motors , which retailed 39,741 units in August, compared to 40,486 units in July. On the other hand, it dispatched 41,001 units to dealers in August, compared to 39,521 units in July. On a year-over-year basis, dispatches declined by 7%. However, Tata Motors experienced a reprieve in August with record sales of its electric vehicles, which totalled 7,079 units, according to the Vahan portal.

Mahindra & Mahindra , the only carmaker bucking the trend of declining domestic sales, saw fewer dispatches in August at 39,399 units, compared to 49,871 units in July. Yet, it retailed marginally more vehicles in August at 43,778 units, compared to 42,207 units in July. On a year-on-year basis, Mahindra’s dispatches to dealers declined by 9%, marking the first decline since 2022.

In his speech on the 79th Independence Day, Prime Minister Narendra Modi announced a comprehensive reform of the existing GST structure, aimed at boosting domestic consumption. Passenger vehicles currently attract a GST of 28%, with a cess levied on various sub-segments, including engine size, vehicle length, and ground clearance.

It is expected that the GST on passenger vehicles will be reduced to 18%, which is largely expected to benefit the small car segment, which have been in distress as consumers have baulked at purchasing amid an affordability crisis. According to a report by Motilal Oswal, SUVs, which currently attract GST rates between 43% and 50% (inclusive of the compensation cess), would now fall under the new 40% rate. If the cess on SUVs is removed, then even they stand to benefit from the new GST structure, albeit to a lesser extent compared to two-wheelers and entry-level passenger vehicles.