Steady model launches by Original Equioment Makers (OEMs) and incoming GST rate cuts may push domestic passenger sales this fiscal, said ratings agency ICRA on Friday.
The domestic passenger vehicle industry, which contracted by 1.1 per cent in the April-July period, is estimated to log a 1-4 per cent growth in the wholesale volume this fiscal year, ICRA noted, as major automobile makers publish their August sales numbers on September 1.
The modest growth in the coming festive period will mostly be based on concerns over elevated inventory levels and a high base, ICRA said.
On August 15, Prime Minister Narendra Modi announced his government’s plans to reform the GST slab structure and reduce the current four-tier structure comprising 5, 12, 18 and 28 per cent slabs to just two – 5 and 18 per cent slabs. This means cars, which were taxed at 28 per cent, may now fall in the 18 per cent tax category.
Also Read: Automobile retail sales up 5 per cent in June
Meanwhile, ICRA also noted that vehicles’ wholesale figures showed an 8.9 per cent growth in July as OEMs built up inventory ahead of the festive season, though volumes remained flat on a year-on-year basis at 3.4 lakh units.
Additionally, retail sales also improved sequentially by 10.4 per cent, but were marginally lower by 0.8 per cent year-on-year, it said.
SUVs continued to dominate sales, contributing 65-66 per cent of the overall passenger vehicle (PV) volumes, with utility vehicles expected to remain the key growth drivers in the near term.
As per the Federation of Automobile Dealers Association (FADA), inventory levels inched up to 55 days by the end of July.
Besides, exports recorded a 9 per cent year-on-year increase in July, albeit on a low base, led by Maruti Suzuki India, followed by Hyundai Motor India, ICRA stated.
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