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Impact of GST on Tata Motors; Dip in the Sales

In the wake of the Goods and Services Tax (GST) being implemented starting July 1, automobile giant Tata Motors revealed that there has been a dip in the sale of passenger vehicles, although the commercial vehicles business grew on month-on month basis, due to BS4 production ramp-up.

According to its sales reports, the total sale of passenger and commercial vehicles, including exports, in June 2017 was capped at 40,358 vehicles, which is 9 percent lower than the corresponding figures in June 2016.

The company’s domestic sales of commercial and passenger vehicles for June 2017 were at 36,854 vehicles, lower by 5 percent compared to June 2016. Tata Motors’ commercial vehicle segment reported a sale of 25,678 units this year, showing month-on-month growth backed by a ramp up of BS4 production across segments.

In June 2017, Tata Motors’ passenger vehicle sales dropped by 10 percent due to uncertainty prevailing on account of the GST, with 11,176 units sold this year compared to 12,482 units sold last year.

The company believes that the decline in volume is temporary and will be recovered in the quarter to come based on 11 percent growth in April-June 2017 quarter compared to the last year. On the exports front, the company sold 3,504 units in June 2017, registering a 40 percent decline compared June 2016, owing to supply constraints.

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