FILE PHOTO: Tata Motors. Credit: REUTERS
New Delhi: Retail sales of vehicles surged by 40.5% year-on-year to hit a record monthly number of 40.23 lakh in October led by strong demand boosted by reduction in GST rates, industry data showed on Friday.
A record 31.49 lakh two-wheelers were sold during the month of October, which is 51.76% higher when compared with the same month last year. Passenger vehicle sales soared by 11.35% to 5.57 lakh units during the month under review, as per data released by the Federation of Automobile Dealers Associations (FADA).
“After an almost quiet September for the first 21 days due to the GST 2.0 transition, October witnessed a swift rebound — almost like a hurdle race where pent-up demand passed the baton to festive sentiment and tax-cut excitement, propelling sales to historic levels,” said FADA President C S Vigneshwar.
The GST Council at its meeting held on September 3 decided to significantly lower indirect taxes on a wide range of goods, including vehicles and auto parts. GST on small cars and motorcycles has been reduced to 18% from the earlier 28%. While the decision was announced on September 3 it came into effect from September 22. The sales of vehicles and other goods picked up after September 22.
“The introduction of GST 2.0 proved transformational — lowering small-car GST rates made vehicle ownership more attainable, especially for the cost-sensitive first time buyer. This affordability boost, timed perfectly with the festive season, turned sentiment into action,” Vigneshwar said.
Near 52% surge in sales of two-wheelers was supported by rural demand, GST reductions, and the festive rush. “Dealers reported stronger footfalls and better sentiment leading to extremely high conversion,” he said.
Favourable monsoon boosted rural demands. Rural sales grew over three times faster than urban.