Auto Dealers Unsure over Post-GST Prices, Stop Booking Vehicles

Under GST most vehicles will be taxed at 28 percent, with an additional cess being levied based on the categories.

Several automobile dealers in Delhi and Mumbai put booking of vehicles on hold on Saturday in the absence of clarity over post-GST prices.

(Photo: BloombergQuint)

Several automobile dealers in Delhi and Mumbai put booking of vehicles on hold on Saturday in the absence of clarity over post-GST prices to be charged to customers. Dealers say they are yet to receive revised price lists, after the introduction of the Goods and Service Tax on 1 July, for existing inventory and new stock they would be receiving from auto manufacturers.

Some auto companies, such as Maruti Suzuki India Ltd issued media statements on Saturday regarding price cuts. But dealers are yet to receive updated price lists said an executive at Competent Automobile, a dealership located in Delhi’s Connaught Place.

He pointed out that an online company price list that all Maruti dealers access had yet to be updated.

The government rolled out the Goods and Services Tax starting 1 July, owing to which prices of most vehicles, barring hybrid models and motorcycles with an engine displacement of over 350cc, were expected to drop by 7-10 percent.  

“The number of enquiries has risen today (Saturday) as customers call to find out if prices have gone down, but we haven’t been able to make a single booking yet,” said a dealer of Mahindra & Mahindra Ltd vehicles.

“For the customers who insist they want to book their vehicles before the prices are announced, we are accepting their bookings on payment of a token amount, but not offering any estimates for the expected price,” said a sales executive at a Hyundai Motor India Ltd dealership.

Under GST most vehicles will be taxed at 28 percent, with an additional cess of 1 percent, 3 percent, or 15 percent being levied, based on their categories. 

Tata Motors Ltd owned Jaguar Land Rover was the only manufacturer on Saturday to issue its updated price list. The company cut its prices by an average seven percent.

Most auto dealers BloombergQuint spoke to said they expected detailed price lists to reach them by 3 July.

• Hero MotoCorp Ltd. dealers expect revised prices by 2 July
• Honda Motorcycle India Ltd dealers said the new prices will reach them on 3 July
• Tata Motors dealers expect final prices by 7 July
• Mahindra & Mahindra Ltd dealers said they had no information yet

In terms of whether dealers saw the disruption as a revenue loss, most said they only expected the bookings to be postponed, and not cancelled. They expressed hope that sales would pick up soon as a result of reduction in prices.

(This article was originally published in BloombergQuint)