Car Makers Expect Surge in Demand Due to Tax Changes

Post by : Armust Desk

Car manufacturers in India are anticipating a significant increase in demand over the next two months. This surge is attributed to two key factors: the upcoming festive season and recent changes in Goods and Services Tax (GST) rates, which are expected to make small cars more affordable. Kumar Priyesh, the Business Head and Director for Automotive Brands at Stellantis India, highlighted these developments as pivotal in driving the anticipated growth.

Factors Driving Increased Demand

GST Rate Rationalisation

The Indian government has recently implemented GST rate rationalisation, reducing the tax burden on small cars. Previously, small cars were taxed at 28%, while larger vehicles attracted higher rates ranging from 43% to 50%. The new tax structure aims to make small cars more affordable for consumers, thereby stimulating demand in this segment.

Festive Season

The period from September to November marks a peak in the Indian festive calendar, including festivals like Onam, Ganesh Chaturthi, Navratri, and Diwali. During this time, consumers are more inclined to make significant purchases, including vehicles. The combination of festive fervor and tax benefits is expected to drive higher sales in the automotive sector.

Impact on Stellantis and Citroen

Stellantis India, which oversees the Citroen brand, is poised to benefit from these developments. The company has focused on local research and development, manufacturing, and supply chain management, enabling it to offer competitively priced vehicles. This strategy has allowed Citroen to maintain accessible prices for its customers, even amidst changing tax structures.

Citroen's recent launch of the Basalt X Range, featuring all-new interiors and India's first intelligent in-car companion, CARA, at a starting price of ₹7.95 lakh, exemplifies the brand's commitment to innovation and affordability.

Industry Outlook

Kumar Priyesh expressed optimism about the industry's performance in the coming months. He noted that the combination of the festive season and GST rate rationalisation is expected to result in a "pent-up demand," leading to better-than-expected growth for the automotive sector.

Priyesh further emphasized that the November-December period and the subsequent quarter are anticipated to outperform previous forecasts, thanks to these favorable developments.

The Indian automotive industry is on the cusp of a potential growth spurt, driven by strategic tax reforms and seasonal buying trends. Manufacturers like Stellantis and Citroen are well-positioned to capitalize on these changes, offering consumers more affordable and innovative vehicle options. As the festive season approaches, the industry anticipates a significant uptick in sales, marking a positive outlook for the remainder of the fiscal year.

Car Manufacturers, Demand Surge, Tax Rationalisation, Stellantis