The one-country, one-tax regime of GST has seen automakers rush to announce reduced vehicle prices. As is known, utility vehicles and larger cars are the biggest beneficiaries of the reduced taxation – from the earlier 55 percent to 43 percent under GST from July 1.
Toyota Kirloskar Motor, which posted subdued sales in June 2017 due to potential buyers delaying purchase to after GST kicks in, has revised vehicle prices by up to 13 percent. With this, the company says it has fully passed on the benefits of GST implementation benefits to customers. The biggest gains are to be had on the popular Innova Crysta MPV (up to Rs 98,500), the new Fortuner SUV (up to Rs 2,17,000) and the Corolla Altis sedan (up to Rs 92,500). The cars have been segment leaders since their launch and continue to see surging demand. The reduced pricing will only serve to heighten the demand. Expect Toyota to post handsome sales increases July 2017 onwards.
Price reductions for the Platinum Etios sedan are up to Rs 24,500 and up to Rs 10,500 for the Etios Liva. The price change will vary from state to state, model to model and variant by variant, depending on tax rates applicable prior to GST.
Expressing his views on the post-GST pricing strategy, N Raja, director and senior vice-president (marketing and sales), Toyota Kirloskar Motor said: “We are happy to pass on the benefits of GST rates on vehicles to our customers. A customer-first philosophy has always been our cornerstone. Thus, we are delighted that with the GST rates our best quality products will become more affordable for buyers. We are hopeful that the price decrease after GST will further boost customer demands in the coming months. It will be fruitful for the growth of the Indian auto industry. We think the industry will break into double-digit growth territory this year.”
Camry and Prius hybrids now cost a lot more
Hybrid cars have surprisingly been the sole vehicle category to take a substantial 12.7 percent hit under GST, what with taxation increasing from the earlier 30.3 percent to 43 percent now. As a result, pricing of hybrid cars for manufacturers like Toyota Kirloskar Motor, Maruti Suzuki and Mahindra & Mahindra has seen a substantial hike.
As a result, the Toyota Camry and Toyota Prius, which come equipped with strong hybrid technology, are now costlier by over Rs 3,50,000 in Bengaluru and by up to Rs 5,24,000 in Delhi under the GST framework.
The Camry Hybrid, which was priced at Rs 36.88 lakh in New Delhi, Rs 42.07 lakh in Mumbai, Rs 32.35 lakh in Kolkata, Rs 39.90 lakh in Chennai and Rs 42.82 lakh in Bengaluru has been a popular buy with those who want a comfortable and large sedan that also makes a green statement.
It was introduced in July 2013 and sold a total of 3,326 units in the domestic market, outselling its petrol sibling (which has sold 608 units from FY2013-14 to end-May 2017). Demand has picked up year on year, with best monthly sales coming in May 2016 when the eco-friendly sedan went home to 173 buyers. As a result of hybrids' prices going up after with GST, sales of the Camry Hybrid are likely to slow down.
Camry Hybrid sales
2013-14: 185
2014-15: 534
2015-16: 1,110
2016-17: 1,265
April-May 2017: 232
Total: 3,326
Nevertheless, with pricing across its entire fossil-fuelled model range dropping with the implementation of GST, Toyota, like other automakers, will see a considerable uptick in its sales numbers. And with demand for SUVs accelerating, it should record greater footfalls in its showrooms this month onwards.
Also read: Impact of GST on new car prices