GST Cuts, Benefits From Income Tax & Repo Rate Cut Will Provide Festive Season Boost: Maruti Suzuki

Summary

In this discussion, Maruti Suzuki’s Parth Banerjee highlights the anticipated positive impact of GST 2.0, income tax benefits, and RBI repo rate cuts on festive season sales, projecting over 20% growth during the 45-day festival period. Retail inquiries and bookings have surged, with small cars expected to grow 10% and the overall industry returning to 6.9–7% growth. New launches, including the Victorious mid-segment model and the upcoming Evitara electric SUV, aim to capture untapped customer segments, while hybrids become cost-competitive. Management exudes optimism, emphasizing strong rural and urban demand, robust festive sales, and strategic expansion into electric and hybrid vehicles.

Takeaways

• 🚀 GST 2.0 reform effective from 22nd September is expected to boost demand across industries, benefiting both businesses and consumers.
• 💰 Combined with income tax benefits and RBI repo rate cuts, the festive season is projected to see strong sales growth.
• 📈 Maruti Suzuki anticipates more than 20% growth in retail sales over the 45-day festival period from Navratri to Diwali.
• 📝 Inquiries have surged by approximately 15% since the GST cut announcement, leading to increased bookings.
• 📊 Bookings at the start of the month were 1.5 lakh, with nearly 10,000 new bookings per day recently.
• 🏘️ Demand sentiment is positive in both urban and rural markets, supported by a good monsoon and strong harvests.
• 💸 Price reductions: small petrol cars ~8.5% and larger cars ~3.5%, with final prices and invoicing effective from 22nd September.
• 🚗 Full-year growth outlook: small cars expected to grow ~10%, with overall industry growth returning to 6.9–7%.
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• ✨ Victorious launch has received strong social media engagement and is expected to capture mid-segment customer interest.
• ⚡ Evitara electric SUV will be launched within the fiscal year, supported by an EV ecosystem including fast chargers at dealerships.
• 🔋 Hybrid vehicles are now priced on par with ICE vehicles, addressing consumer concerns about EV infrastructure and charging.
• 🌟 Maruti Suzuki remains technologically agnostic, aiming to serve customers across ICE, hybrid, and electric vehicle segments.
• 💡 Overall management sentiment is highly optimistic, focusing on demand revival, new launches, and sustained market growth.

Q & A

What is the significance of the GST 2.0 reform mentioned in the interview?

The GST 2.0 reform, effective from 22nd September, is expected to boost the auto industry as well as other sectors, benefiting the common consumer through reduced tax rates and contributing to increased festive season sales.

How does Maruti Suzuki expect the festive season sales to perform compared to last year?

Maruti Suzuki expects over 20% growth in retail sales over the 45-day festive period from Navratri to Diwali, noting that a month-to-month comparison with last year is misleading due to the earlier timing of Navratri this year.

What has been the impact on booking inquiries since the GST cut announcement?

Booking inquiries have surged by approximately 15% since the GST cut announcement, indicating a strong consumer response and a potential rise in bookings.

What are the expected price reductions for Maruti Suzuki vehicles?

For small petrol cars, the price reduction is around 8.5%, while for bigger cars, where GST has dropped from 45% to 40%, the reduction is approximately 3.5%.

What is Maruti Suzuki's expected growth for small cars and the overall industry this year?

Maruti Suzuki expects small car sales to grow by around 10%, while the overall industry is projected to return to a growth rate of 6.9–7% due to GST reforms.

How is the demand sentiment across rural and urban markets?

Urban markets are already strong, and rural markets are showing positive demand due to a good monsoon and a resultant strong harvest, creating favorable conditions for increased vehicle sales.

What has been the initial response to the new product 'Victorious'?

The Victorious has received a very strong response, with over 100 million social media views within 48 hours of launch. It targets the mid-level segment, particularly Zenzi customers.

When will Maruti Suzuki announce the pricing and start invoicing for vehicles under GST 2.0?

Pricing and invoicing for vehicles under GST 2.0 will begin on 22nd September.

What strategy is Maruti Suzuki adopting for electric and hybrid vehicles?

Maruti Suzuki plans to launch an EV ecosystem along with the Evitara electric SUV within this fiscal year, including fast chargers at dealerships. Hybrid vehicles are priced on par with ICE vehicles, addressing consumer concerns about charging infrastructure.

What is Maruti Suzuki's outlook regarding market headwinds in the near term?

Currently, the company sees more tailwinds than headwinds, emphasizing positive factors like GST reforms, tax benefits, festive demand, and strong rural and urban sentiment rather than economic or market risks.

How many bookings does Maruti Suzuki receive daily during the current period?

Maruti Suzuki is receiving close to 10,000 new bookings daily, on top of the 1.5 lakh bookings at the beginning of the month.

What is Maruti Suzuki's approach to serving customers during the festive season?

The company aims to deliver as many vehicles as possible while ensuring financing, insurance, and registration processes are completed efficiently, starting from 22nd September.