Maruti Suzuki has sold 93,263 units in June 2017 to cap off a good first quarter of domestic sales. While there is a very marginal 1.2% increase over June 2016 sales (92,133 units), the month-on-month figure is the one to worry about. Domestic sales in June dipped from 130,676 units in May by almost 30%. And while that can largely be attributed to the cyclical seasonality that always sees sales slow down in the middle of the year, it also partially tells the tale of uncertainty that distributors, dealers and some buyer have seen due to the GST rollout that's taken place today. There was a apparent wait and watch attitude amongst some buyers of goods like cars - which were expected to see a slight reduction in prices. But again we must reiterate the trend that sees June sales traditionally seeing a dip, as most buyers prefer waiting for the festive period or post-monsoon to make purchase decisions for vehicles - especially passenger cars. Having said that Maruti will be happy with how the first quarter has closed with a 14,3% year-on-year increase in sales at 368,431 units.
Maruti's drop in June sales is across the board, not just in the larger car segments - which are expected to see the bigger price corrections. The compacts that dominate Maruti's sales charts - Swift, Celerio, Ignis, Baleno and Dzire have seen a month-on-month drop of 26%. Even year-on-year this space sees Maruti sales down 3.5% over June 2016. And given Maruti is the bell-weather for the industry, a similar trend is expected for the June performance from most manufacturers. That is barring those who began offering massive pre-GST benefits prior to the July 1 deadline in a bid to boost sales. Many manufacturers also reduced some output to ensure there was not much inventory piled up in their distribution channels. The idea was to reduce any remaining inventory post July 1 - that would have to be sold at a loss once GST kicked in with reduced tax rates. Read here about how the GST will affect your car-buying decisions.
Meanwhile, Maruti has already been quick to announce - "The company has passed on the entire benefit of GST rates on vehicles to its customers. The ex-showroom prices of Maruti Suzuki models have come down by upto 3%. The rate of reduction varies across locations depending on the VAT rates applicable prior to GST." The only bad news Maruti faces post GST? "Owing to withdrawal of tax concessions on mild hybrid vehicles, the price of Smart Hybrid Ciaz Diesel and Smart Hybrid Ertiga Diesel has increased.", said a statement from Maruti Suzuki India.
The new pan-India GST regime prices are effective from July 1, 2017, but we are still awaiting exact variant-wise price lists from most manufacturers.