Positive forecast for 2017 new car sales

While the uncertainty relating to GST and its implementation has slowed down the growth of some car manufacturers in May, the industry is likely going to have another outstanding year based on the sales performance of leading car makers thus far in 2017. 

The Indian car industry looks all set to post another stellar year. Monthly sales reports for the month of May 2017 are out and you’ll note that there’s an overall 9 per cent hike in passenger car sales. And it’s not just the last month where car sales have spiked - barring a few manufacturers, almost all the industry bigwigs have been posting positive growth since the start of 2017.

Between January-April, 2017, car sales were up by 12 per cent, which is quite impressive. And if this continues to be the case for the remainder of the year, SIAM forecasts a growth of 7-9 per cent in car sales in 2017.

Like mentioned above, it wasn't all sunshine and rainbows for some manufacturers last month, mainly owing to the fact the GST will come into effect starting July. The implementation of GST is expected to make large sedans and SUVs substantially more affordable and, as a result, prospective buyers of these segment of cars are postponing their purchase.

Toyota's sales were down by 13.5 per cent for the very same reason. Commenting on the same, N. Raja, Director & Sr. Vice President, Sales & Marketing, Toyota Kirloskar Motor said. "With the ambiguity surrounding the upcoming GST proposed tax structure, the customers are postponing their plan of purchasing the vehicle post the GST implementation. We expect this impact to magnify in June 2017 until the customers have a clear understanding of the final pricing post the GST roll out."

Although Mahindra posted a growth of 3 per cent in domestic sales in May 2017, its sales in June are expected to be affected because of GST as well. On the other hand, Tata's passenger car division posted an impressive 27 per cent growth in the domestic market, thanks to products like Tiago, Tigor and Hexa. However, the company is uncertain on how GST will impact its sales performance in June 2017.

Honda seems quite upbeat about the GST coming into force. Speaking of the development and the monthly sales performance – up by 13.3 per cent in May 2017, Yoichiro Ueno, President and CEO, Honda Cars India said “We are happy to have achieved positive growth in May sales. We continue to receive a strong demand for New City and Honda WR-V. The government’s plan for timely rollout of GST & a better monsoon forecast will aid in sales growth in coming months.”

Country’s largest car manufacturer, Maruti Suzuki, might not have to worry about the slowdown in June since its domestic sales were up by 19.2 per cent in May 2017. On top of that, Maruti Suzuki revels in the small car segment, which means its cars are likely going to be more expensive after GST implementation instead of getting a price cut.

Overall, though, it's expected that the car industry will pick up momentum from July 2017, meaning the year is expected to end on a high yet again.