Anticipating a decline in vehicle prices with the government proposing a reduction in Goods and Services Tax, for the first time this year automobile dealers are seeing a significant spurt in customer footfalls at showrooms with customers eager to recce and test drive various models, especially small cars.
The increase comes after the government announced GST reforms that would bring down tax on automobiles to 18 per cent from 28 per cent now, making them cheaper.
Since the announcement earlier this month, dealerships are reporting over 20 per cent increase in customers thronging showrooms to enquire about the estimated price reduction on specific models, colour availability, financing options after the GST cut and delivery time period.
“The announcement on the GST cut has been very positive for the automobile dealers as we are witnessing a sudden increase in consumers approaching showrooms, calling us and inquiring about specific passenger vehicle and two-wheeler models through the internet. This is happening for the first time this year, the announcement has made the people who were holding back on big purchases since last year contemplate buying,” Sachin Vasantrao Mahajan, Chairperson of Federation of Automobile Dealers Association (FADA) Maharashtra, told businessline.
“The footfall ideally increases at the start of the festive season, but this is a sudden surge in walk-ins that we are witnessing. The walk-ins have increased 20 per cent month-on-month,” added Mahajan.
Dealers are seeing heightened demand for smaller cars, where demand has been sluggish over the past few years due to consumer shift towards SUVs and repeated price hikes.
Monsoon impact
Apart from affordability, heatwaves and unseasonal rains have affected footfalls at showrooms. FADA had earlier stated that the dealer sentiment between July and September showed 63 per cent of dealers forecasting growth, 27 per cent expecting flat performance, while 9 per cent of dealers were bracing for a degrowth.
However, while the enquiries and footfall have gone up, consumers are holding out till the new rate implementation to make the purchase. According to industry insiders, after the GST reforms are implemented, the price reduction are estimated to range between ₹50,000 and ₹80,000 depending on models.
FADA representatives have met the Commerce Minister Piyush Goyal to discuss quicker implementation of the GST reforms to coincide with the festival season, that starts Wednesday with Ganesh Chaturthi.
“We are working with the government and are anticipating the implementation of the GST reduction soon. The footfall in showrooms has increased even as some consumers have postponed their purchases. It is not at an alarming state and in the long term it will be a benefit,” CS Vigneshwar, President of FADA, told businessline.
Source: The Hindu businessline
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