The first day of implementation of GST-2 has seen an unprecedented sale of four wheelers driven by GST cut of 10% and other special festive offers given by dealers. This Navratri brings delight among purchasers as well as sellers.
Automobile companies are hoping to have record billing of single-day sales on 22nd of September, 2025 from which the new rate cut will be implemented. Large number of bookings are in line after the sales were almost stopped for nearly a fortnight due to consumer expectation of fall in price. The distribution pipe line was almost dry because of postponement of purchase by customers and huge advance orders were booked matching with the customer’s demand during ‘Navaratri’ and Durga Puja’. It is expected that Hyundai alone is expected to bill about ten thousand vehicles to its distribution channel on first day.
The government of India has declared reduction of GST on automobiles from 28% to 18% two weeks before and with effective from 22nd of this month bringing sales to apparently standstill during this period. During this period, footfall and enquiries were increased in show rooms without closure of purchase deals. The period from Navratri to post Dhanteras is vital for automobile dealers as around 15% of annual sales happen during this period. High value products life Safari and harrier suffered losses due to blockage of sales causing interest loss and blockage of capital. Some dealers also dispose stocks even if it meant a margin loss. Some dealers also gave attractive offers and free benefits to dispose the stocks at a price nearer to post-GST price. The sluggish period will have a negative impact in post-GST period.
The high demand period from third week of October to Diwali will be crucial from seller point of view when matching the inventory level and supply thereof will be challenging. The dealers may face tremendous pressure of working capital as well as higher capital cost. Dealers apprehend that the cess credit at later date will be unusable during peak demand period when the working capital requirement would be high. According to an estimate of FADA (Federation of Automobile Dealers Associations), a potential loss to the tune of 2500 crore rupees will occur and therefore it urged government to transfer this amount to CGST account of respective dealers immediately.
Two-wheeler dealers face the similar problem and expect a good sale during Navratri period as customer footfall and bookings are encouraging. But their capacity may need augmentation (additional staff) to handle customers for product demo, test rides, deliveries and new bookings. Two-wheeler sales is expected to increase by 10% during current year due to Price reduction.
The first day of implementation of GST-2 has seen an unprecedented sale of four wheelers driven by GST cut of 10% and other special festive offers given by dealers. More than 20,000 enquiries and more than 60,000 billings for four-wheeler vehicles is unprecedented. This Navratri brings delight among purchasers as well as sellers. On the first day of post-GST revision more than 50,000 cars were sold by just three companies. Maruti Suzuki sold more than 30,000 vehicles on first day followed by Hyundai Motors with more than 11,000 and Tata Motors with more than 10,000 or vehicles. Besides sales, new enquiries on first day have crossed 50,000 mark which is unbelievable.
This surge is because of various reasons like substantial GST reduction, additional festive offers, elimination of compensation cess, customers increased paying ability and other emotional reasons to buy in this grand festival. The demand boost also contributed by substantial reduction in GST as well as sluggish or no sales during cool off period post GST-2 declaration. This surge in demand may not last after Diwali. If the trend continues in long term, then the demand will be treated as stabilised and the sellers has to augment their capacity to match with.
