GST effect: From Rs 30,000 cash discount on Maruti Suzuki Wagon R to Rs 1 lakh on XUV 500, car dealers offering huge price cuts

Post GST, electric vehicles and big SUVs will see a higher incidence of tax. (Reuter

Cars dealers are dishing out discounts on a  range of models with a view to propping up sales in June, ahead of the rollout of the goods and services tax (GST) on July 1. Cash discounts on Wagon R have been increased from Rs 20,000 to Rs 30,000, while on Swift they’re up at Rs 20,000 from Rs 10,000. Same on Celerio has also been increased to Rs 20,000 while cash discounts for Alto has been increased to Rs 30,000-Rs 35,000 from Rs 20,000 currently. This cash discounts will accompany free insurance, loyalty bonus and corporate discounts.

With customers hoping they may get a better deal post the rollout of the GST, some of them are postponing purchases. As such, dealers are hoping to lure them with discounts.

Post GST, electric vehicles and big SUVs will see a higher incidence of tax. For example Maruti dealers in cities like Delhi and Kolkata have increased cash discounts on products like Alto, Wagon R, Celerio and Swift for customers who can take delivery by June 31. Same has been the case for Hyundai where dealers have doubled the discounts on Eon and Grand i10 even before the company has announced the discount rate for the June.

“Though GST will not impact the sub 4 metre cars but we are offering more discounts since we have to maintain our retail sales in June. Otherwise most of the customers will wait for GST to kick in. So the only way to deal with this development is increase the discounts,” said a Maruti dealer.

According to a Hyundai dealer, though the company is yet to come out with discount chart for the month the dealers are offering additional discounts to retain the retail sales of the month.

According to the new tax rate under GST, cars and SUVs with a platform size of more than 4 metres and diesel engine size of more than 1.5 litre, will fall under the tax slab of 43% compared the existing tax rate of 51.5% and 55%, respectively.

Price of Japanese car maker, Toyota’s Innova and Fortuner is likely to get reduced once the GST kicks in but the dealers are not giving discounts since both the products are commanding good demand in the market. Mahindra and Mahindra (M&M) on the other hand is offering a discount of up to 1 lakh in June on XUV 500.

“Currently there is Rs 30,000 discount on Scorpio hybrid and we are expecting an increase in price of the vehicle in the next couple of months. So we are trying to push this product. We still do not know the kind of impact GST will have on the prices from July,” said a M&M dealer in Mumbai.

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