How Resilient Is India's Automobile Sector Sales in August Despite GST Arbitrage?

New Delhi, Sep 2 (NationPress) The automobile sector in India demonstrated robust retail sales during the festive month of August, despite the looming GST arbitrage, according to a recent report.

HSBC Global Investment Research noted, "As anticipated, inquiries have surged across various segments, with discounts remaining high throughout the month."

However, the firm cautioned that the next two weeks may experience a slowdown as consumers may prefer to delay purchases in anticipation of a GST reduction.

The report indicated that sales could decline as we transition into September. September also brings 15 days of 'shraad', traditionally viewed as an inauspicious time for purchases. Commercial vehicle (CV) discounts are expected to remain stable and not increase in the short term.

On a brighter note, demand for tractors is projected to stay strong due to favorable monsoon conditions and high reservoir levels.

During August, Mahindra and Mahindra (M&M) saw a remarkable domestic volume growth of 28 percent, while Escorts reported a 27 percent year-on-year increase.

The penetration of electric four-wheelers rose to 4.5 percent in August, with Tata's market share climbing to 40 percent and M&M's to 19 percent, while MG's share decreased to 28 percent.

In contrast, electric two-wheeler sales maintained a penetration of 7.6 percent, with retail sales reaching 1.4 lakh units. TVS sold 24,000 units, Ather reached 18,000 units, and Bajaj recorded 12,000 units in sales.

Meanwhile, Maruti's overall volumes fell by 1 percent year-on-year (YoY), as an 8 percent dip in domestic sales was counterbalanced by a 41 percent YoY rise in exports. Within domestic sales, car sales increased by 5 percent YoY.

M&M's SUV wholesale volumes reached 39,400 units, marking a 9 percent YoY decrease. Tata's passenger vehicle (PV) volumes fell by 10 percent YoY, although electric vehicles (EVs) surged by 44 percent.

Hyundai's domestic sales dipped by 11 percent, while exports increased by 21 percent in August. The report highlights the significant export growth for both MSIL and Hyundai.

In the two-wheeler sector, Bajaj's domestic volume fell by 12 percent, but exports rose by 25 percent.

TVS experienced a 30 percent YoY growth in 2W volumes, with domestic sales climbing by 28 percent and exports by 36 percent.

Royal Enfield (RE) saw a 57 percent YoY increase in domestic volume and a 39 percent rise in exports compared to the same month last year.

Overall, commercial vehicle volumes for major OEMs grew by 5 percent YoY, with light commercial vehicles (LCVs) up by 6 percent, medium and heavy commercial vehicles (MHCVs) also up by 6 percent YoY, and buses up by 3 percent.