According to Vinkesh Gulati, the auto sector is currently experiencing a slowdown in new car bookings. This is due to customers delaying purchases in anticipation of potential discounts once new tax rates are implemented later this year. Gulati explains that there is still confusion surrounding the tax rates, but it is expected that the GST rate on entry-level cars will increase to 18%. As a result, many customers are postponing their purchases, particularly in Maharashtra and southern India, where festivals like Ganesh Chaturthi and Onam have typically triggered demand.
Gulati notes that the difference between the current and expected GST rates is significant, leading customers to wait for potential discounts. However, auto dealers and original equipment manufacturers (OEMs) are unable to offer discounts ahead of the new GST rates, as this could create ethical issues and problems in the market. OEMs already operate on thin margins, making it difficult for them to absorb potential losses.
The government is reportedly trying to announce the new GST rates sooner, which could happen within the next 15-20 days. Gulati believes that this period of slowdown will be recovered during the festive season demand. The auto sector is hoping that the announcement of new GST rates will bring clarity to the market and encourage customers to make purchases. Until then, the industry is likely to experience a temporary slump in sales. Gulati’s comments suggest that the auto sector is cautiously optimistic about the upcoming festive season, which is typically a peak period for car sales in India.
Overall, the auto sector is experiencing a temporary slowdown due to customer anticipation of potential discounts. The industry is waiting for clarity on the new GST rates, which is expected to be announced soon. Once the new rates are implemented, the sector is likely to experience a recovery in sales, particularly during the festive season. Gulati’s comments provide insight into the current state of the auto sector and the potential impact of the new GST rates on customer behavior and sales.