Premium, luxury sedan sales doubles in July on GST price cuts

Key highlights:

• Sales of premium and luxury sedans have doubled in July due to GST
• The D1 car segment posted a 112% growth in sales in July
• The D2 car segment Skoda Superb saw a 47.8% YoY growth in July

The decision to pass on the lower taxes due to the implementation of the goods and service tax (GST) seems to have had a positive impact on the car sales, especially luxury sedans. Sales of premium and luxury sedans priced just below Rs 15 lakh and Rs 25 lakh, respectively, have doubled not only on a year on year basis, but from the previous month too.

A reason why luxury and large car makers have been against the GST Council's moves to increase the GST cess to 25% from the current 15%. As this will see a hike in the prices of these cars to even higher then pre-GST levels.

The D1 segment, which consists of premium sedans below Rs 15 lakh, and the D2 segment, which consists of luxury sedans below Rs 25 lakh have seen a huge jump in sales due to the price cuts offered by various manufacturers after the roll-out of GST on July 1.

The D1 car segment for instance posted a 112% growth in sales in July in comparison to the same month last year and on a month on month basis it posted a 129% growth in sales.

The car sales of the company grew to 6,209 units in July 2017 from 2,932 units in the same month last year. Sales of the D1 segment in June stood at 2,711 units, according to data from the Society of Indian Automobile Manufacturers (SIAM).

The D2 segment consisting of luxury sedans posted an even higher growth of 184% during the month of July in comparison to July 2016. From the previous month it saw a saw a 674% growth in sales in July 2017.

The sales in the D2 segment stood at 4,693 units in July 2017 from 1,653 units in the same month last year. In June the sales of the luxury sedan segment stood at 606 units.

Some of the top selling D1 sedans include Skoda Octavia which saw a 127% growth YoY and 562% MoM growth as it sold 457 units in July and Toyota Corolla which saw a 9.3% YoY growth and a 855% MoM growth.

In the D2 car segment Skoda Superb saw a 47.8% YoY growth in July and a 118% MoM growth in the same month as it sold 170 units during the month from just 78 units sold in the same month last year.

Besides that, SUVs in these price range too posted a huge growth in sales. This includes Ford Endeavour which posted a 48% growth in sales, Hyundai Tucson which posted a 107% MoM growth, Tata Hexa posting a 184% MoM growth, Toyota Fortuner sales rising by 506% growth and Volkswagen Tiguan with a massive 2,656% MoM growth in sales.

Premium and luxury car markers such as Ford India, Jaguar Land Rover, Mercedes-Benz, BMW, Toyota, Skoda and several others decided to slash their prices Rs 10 lakh on certain models in order to pass on the benefit of the reduction in taxes due to lower GST.

The GST rate of 28% plus 15% cess was charged on cars more than 4 metres, which include sedans and SUVs. This brought the tax down to 43% from a tax rate of 47-53% depending on the States.

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