Auto, electronics dealers pull plug on festive stock

For most other carmakers, however, it is still a ‘wait-and-watch’ policy, according to a dealer of multiple brands including Tata Motors, MG Motor India, and Hyundai.

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Automobile and consumer electronics dealers are treading cautiously ahead of the crucial festive season as they await an imminent cut in Goods and Services Tax (GST) and product prices. The dealers are going slow on adding inventory to preserve working capital and avoid locking funds in input tax credit should the anticipated rate cuts come into effect. Mahindra & Mahindra has advised its dealers to stock only what can be sold easily, particularly steering clear of high-cess models. “Dealers have been advised to defer purchases of vehicles attracting higher cess, especially in the absence of clarity on how pre-ratechange stock will be treated,” said a person aware of the matter. For most other carmakers, however, it is still a ‘wait-and-watch’ policy, according to a prominent dealer of multiple brands including Tata Motors, MG Motor India, and Hyundai. “There is no clear communication from OEMs yet on the strategy to follow ahead of the possible GST and cess changes,” this person said.

Wholesale targets

“However, there is pressure to lift stock as per wholesale targets,” this person said. Spokespersons for Maruti Suzuki India, Hyundai Motor India, Mahindra & Mahindra, Tata Motors, and Kia India declined to comment.

A Group of Ministers on GST rate rationalisation approved on August 21 the Centre’s proposal to eliminate the 12 per cent and 28 per cent slabs, consolidating the GST structure into two rates — 5 per cent and 18 per cent. A higher levy of 40% GST could be levied on sin products like alcohol, tobacco, and some luxury goods.

The GST Council is likely to meet in the third week of September to finalise the new rates and date of implementation.

The tax rate revision comes at the onset of the festive season, with key festivals such as Onam and Ganesh Chaturthi already underway. Already, some consumers are holding back on high-value purchases though walk-ins and enquiries remain robust, according to executives.

Dealers’ cautious stance comes amid reports that the Centre is considering lowering GST rates on large-screen TVs, air conditioners, dishwashers, and possibly some automobile segments.