This is how GST is impacting commercial vehicle sales

Commercial vehicles (CV) posted the least growth of 0.22% among automobile segments in the second quarter of FY17. This was in comparison to a robust 9% growth in the segment in the same quarter last year.

This decline in growth was due to a slide in sales of Medium and Heavy Commercial Vehicles (MHCVs) segment with it. MHCV sales declined by 14% in Q2 FY17 from a huge 43% growth in the corresponding quarter last year, according to data from Society of Indian Automobile Manufacturers (SIAM).

However, the automobile industry body does not expect any quick turnaround in MHCV fortunes anytime soon. MHCV sales are expected to remain flat in the next quarter too.

One of the reason's SIAM says is uncertainty around certain aspects of the Goods and Service Tax (GST) that is making transporters hesitant regarding their buying decision. One of it is the uncertainty around the discounts which transporters can avail in FY18, owing to GST.

Warehouse re-alignment is expected and hence transporters are unsure about the type of vehicle which will be required to serve demand, is another reason.

“Also keeping in mind the shift in warehouses at end-user level, transporters fear loss in business and hence might postpone buying decision,” said SIAM.

There is however expected to be slight advancement of MHCV sales expected in the fourth quarter of FY17 due to Pan-India BS IV implementation from April 1, 2017.