August auto despatches: PVs slow down on GST jitters, 2Ws maintain momentum

New Delhi: August auto despatches reflected mixed trends across segments, even as regional festivals such as Onam, Ganesh Chaturthi and Raksha Bandhan lifted retail sentiment to an extent.

With these celebratory occasions arriving earlier than usual, the anticipated pre-festive build-up of wholesales remained subdued in passenger vehicles as OEMs curbed factory despatches in an already sluggish market.

Inventory concerns and input tax credit implications loomed large as dealers procured vehicles at prevailing GST rates while buyers deferred purchases in anticipation of a possible rate cut. In contrast, most two-wheeler makers maintained year-on-year growth in despatches thanks to agricultural prosperity combined with the festive push from Onam and the upcoming Navratri and Durga Puja season.

The proposed GST cut, announced by Prime Minister Narendra Modi on Independence Day, is expected to be the most significant tax overhaul since 2017 which will reduce on-road vehicle prices.

ETAuto had earlier reported that the timing would be crucial as festive sales, which typically contribute 30-40 per cent of annual automotive volumes, risked being dampened by GST-related uncertainty amid already weak demand.

At present, small cars and two-wheelers taxed at 28 per cent while large-sized cars attract 43–50 per cent depending on their size.

According to Nomura, the benefits of a GST cut would be more pronounced for four-wheelers than two-wheelers. The brokerage said a reduction could have a multiplier effect of 1–1.5x, potentially translating into a 5–10 per cent demand increase across segments.

Segment-wise details are discussed below.

Passenger vehicles

SUVs continued to dominate, contributing 65-66 per cent of overall volumes, and are expected to remain the segment’s key growth driver in the near term. However, the top four carmakers reported year-on-year declines in wholesales for August.

Industry estimates place domestic passenger vehicle despatches at around 3.3 lakh units, nearly 7 per cent lower than the 3.5 lakh units recorded a year earlier.

Maruti Suzuki, the market leader, said it currently has a pending order book of nearly 1.5 lakh units and about 50 days of stock across its network.

Partho Banerjee, Senior Executive Officer of Marketing and Sales, said the company witnessed healthy bookings through the month. However, it has still decided to align wholesales strictly with dealer requests post the GST announcement.

He added that dealers were unwilling to hold inventory of larger utility vehicles given the higher GST burden compared to compact cars.

Maruti reported year-on-year declines across categories except compact cars (Baleno, Celerio, Dzire, Ignis, Swift, WagonR), which registered marginal growth. Mini cars (Alto, S-Presso) fell 36 per cent, while utility vehicles (Brezza, Ertiga, Fronx, Grand Vitara, Invicto, Jimny, XL6) dropped 14 per cent year-on-year. Ciaz production was discontinued in March.

Mahindra & Mahindra (M&M), which held the No. 2 position in despatches for the first four months of the fiscal year, slipped to fourth place in August.

Nalinikanth Gollagunta, CEO, Automotive Division, said, “With the final GST announcement approaching, we consciously decided to bring down the wholesale billing to minimize the stock being carried by our dealers. We look forward to the GST rationalisation, which would be a demand driver through the festive season.”

He added that August otherwise saw relatively robust demand in the SUV segment amid anticipated GST rate changes.

Varinder Wadhwa, Vice President, Sales-Service-Used Car Business at Toyota Kirloskar, said the company “will closely observe market trends as they unfold”, as September will be an important phase.

Honda noted that retail sales, particularly in Kerala and neighbouring states, were supported by Onam festivities during the month.

The company’s despatches during August dropped 28 per cent to which Kunal Behl, Vice President, Marketing & Sales, added, “In view of the ongoing speculations for potential GST rate changes, we followed a cautious approach towards factory despatches in August to align the inventory as per market situation. Early clarity on GST will be crucial to maintain buying momentum, and possible reduction will surely boost auto sales during festive buying season.”

Meanwhile, ratings agency ICRA has projected a modest wholesale volume growth of 1-4 per cent in FY2026, following a 1.1 per cent contraction in the first four months of the fiscal.

Two-wheelers

Market leader Hero MotoCorp said it was seeing a consistent demand in both urban and rural areas. However retail sales have seen an anticipated effect of the ongoing monsoon season. It maintains that “a positive turnaround is expected in the coming months.”

Honda Motorcycle and Scooter India (HMSI), which has been giving tough competition to Hero, reported a marginal dip of 2 per cent during the month.

TVS reported a 28 per cent year-on-year growth, while cautioning that for EVs, magnet availability “continues to pose challenges in the short to medium term.”

Pune-based Bajaj Auto reported a 12 per cent drop in despatches, in line with a continued calibration and softness in retail demand for its motorcycles over the past few months. Last month, its CFO Dinesh Thapar acknowledged that pending product upgrades and regional softness are primarily responsible for the muted growth.

Riding the premiumisation wave, Royal Enfield maintained its upward trajectory with a 57 per cent increase in wholesales.

Suzuki Motorcycle India posted 5 per cent growth. Vice President, Sales & Marketing, Deepak Mutreja, said the August performance “gives us momentum going into the festive season”.

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