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Car and sports utility vehicle (SUV) registrations grew by just 1% in August to 323,256 units. The growth comes on the high base of last year and amid excessive rainfall hitting several parts of the country.

Though the month began on a positive note, the demand momentum fizzled out during the second half with the announcement of GST rationalisation, auto dealers pointed out.

Festive demand and GST clarity to lift sales

Following a revision in prices by carmakers over the last few days, dealers have reported a surge in consumer enquiries and bookings. Most actual billings and deliveries are scheduled after September 22, also the first day of the auspicious Navratri period, they said.

“Dealers expect September to deliver a sharper rebound, as GST clarity and auspicious festive days converge to unlock deferred demand,” CS Vigneshwar, president, Federation of Automobile Dealer Association (FADA), said.

For a drop in GST and compensation cess ranging between 11% and 13%, most passenger vehicles have seen a reduction in prices ranging from 8.5%10%, translating to Rs 40,000Rs 1,55,000 in the massmarket segment and Rs 3 lakhRs 8 lakh for the luxury car segment.

The total number of retail sales during August was close to the wholesale total of 330,259 units clocked during the same month.

Due to the high number of despatches by automakers in previous months, the total inventory with the dealerships is estimated to be around 600,000 units. At the end of August, average inventory levels stood elevated at around 56 days, FADA said in a note. Despite this, carmakers are expected to crank up supplies in September.

Mixed trends across vehicle segments

Meanwhile, twowheeler sales rose 2% to 1.37 million during August. Enquiries remained strong, fuelled by the onset of festivals such as Onam and Ganesh Chaturthi, with many customers keen on auspiciousday deliveries, the note added.

“However, excessive rains and localised floods in north India disrupted rural mobility, while erratic supply of popular scooter models constrained conversions. The GST announcement also led buyers to defer purchases to September,” Vigneshwar said.

New contracts from ecommerce companies, replacement demand and improved business sentiments drove retails in the commercial vehicle segment. Truck and bus volumes rose 9% to nearly 76,000 units in August. Threewheelers, however, saw a decline of little over 2% in the same month to 103,105 units. GST on them will also be brought down to 18% from 28%.

September is expected to be a twophase month: a muted first half due to Shraddh and the GST waitandwatch, followed by a sharp surge as policy clarity, festive sentiment and OEM schemes that mirror upcoming GST reductions converge, FADA said.