During his address at the 7th Auto Retail Conclave organized by the Federation of Automobile Dealers Associations (FADA), Goyal acknowledged that the implementation of the new GST slabs presented several challenges during the transition phase. The biggest problem faced by dealers is the cess balance on unsold inventory.

FADA President C.S. Vinnishwore pointed out that the burden of the cess should be borne by customers, but currently, this responsibility falls on the dealers. He warned that if a solution isn’t found quickly, dealers could suffer heavy losses during the festive season, potentially exceeding ₹2,500 crore.

The Society of Indian Automobile Manufacturers (SIAM) also wrote to Finance Minister Nirmala Sitharaman, appealing for a reduction in the cess burden. SIAM President Shailesh Chandra stated that a solution to the cess balance on dealers’ books is essential and that a positive outcome is expected soon.

Additionally, FADA has written to Prime Minister Narendra Modi, requesting that the cess balance up to September 21 be transferred to the IGST/CGST credit ledger to allow it to be adjusted against regular tax liabilities.

Goyal urged dealers and auto companies to create a robust framework or charter to ensure that any foreign company entering the Indian market maintains a long-term presence and doesn’t suddenly withdraw, putting dealers in difficulty.

He recalled that dealers had suffered significant losses when global companies like Ford and General Motors abruptly exited. Consequently, FADA is working on a model dealer agreement, having studied over 200 contracts across 24 countries. This agreement has already been adopted by Honda Cars and MG Motor, with several other companies promising to implement it soon.

Goyal commended the Auto Component Manufacturers Association (ACMA), noting that the organization never brings complaints but always engages in constructive dialogue. He attributed India’s component industry’s self-reliance, competitiveness, and export capabilities to this approach.

The result was a surge in inquiries and bookings during August, yet a slowdown in actual sales. Customers were awaiting the implementation of the new GST rates, which took effect from August 22nd. According to FADA, while inquiries were positive, customers were hesitant to finalize purchases. Many buyers preferred to wait until the GST 2.0 implementation on September 22nd, causing stagnation across all segments. However, an improvement in sales is anticipated from September onwards.

Passenger vehicle sales, including cars and SUVs, reached 3,23,256 units in August, reflecting a 0.93% year-on-year rise, but a 1.63% month-on-month decline. Deliveries saw an early boost from Onam and Ganesh Chaturthi celebrations, but in the latter half of the month, consumers postponed their purchases to benefit from the GST changes. Heavy rainfall and urban flooding also reduced showroom foot traffic. FADA Chairman C.S. Vigneshwar believes that the festive season, beginning at the end of September, will provide a boost. With decreasing interest rates and increasing transparency in GST, passenger vehicle sales are expected to accelerate.

Two-wheeler sales in August stood at 13,73,675 units, marking a 2.18% year-on-year increase and a 1.34% month-on-month rise. Inquiries were promising, but heavy rainfall in several states slowed down rural purchases. Scooter sales remained strong, while commuter motorcycle purchases were postponed. Dealers recorded increased bookings for September-October, indicating a gradual build-up of demand.

FADA believes that the demand lost in August is not gone, but rather deferred. With a stable GDP of 6.3-6.8%, low inflation, and a favorable monsoon, all signs point toward robust demand during the festive season. September will be divided into two parts. The first part will be quiet during the Shradh period, but after September 22nd, when GST 2.0 and Navratri coincide, there is an expectation of a significant increase in sales across passenger vehicles, two-wheelers, CVs, and three-wheelers due to pent-up demand.