Pre-GST jitters slow Maruti Suzuki’s June sales, but Ciaz sees 41% growth

India's largest carmaker Maruti Suzuki posted only 1 .2% sales growth in June, as many buyers delayed their car purchase ahead of the landmark Goods and Service Tax (GST) rolled out on July 1.

The slowed growth was mainly due to the 8.9% drop in sale of small cars -- Alto and WagonR. The company sold 25,524 units last month as over 27,712 in June last year.

Maruti Suzuki's mid-size sedan Ciaz saw a good 41.1% growth to 3,950 cars last month, from 2,800 units in June 2016. This growth was most likely driven by purchases in the pre-GST sale as the new tax on hybrids is now up from 12% earlier to 28%.

But its utility vehicles segment continued to grow, at 43% last month, thanks to the consistent demand for S-Cross and Vitara Brezza, as well as the likely pre-GST purchases of Ertiga SHVS.

Maruti Suzuki's exports almost doubled in June to 13,131 units over 6,707 units of June 2016, but the domestic sales were stunted at 1.2%, selling 93,263 units in June as over 92,133 in June 2016. The overall passenger vehicle sales grew 7.6%, from 98,840 last month-year to 1,06,394 units last month.

Ahead of the GST roll-out, "manufacturers slowed down their dispatches to clear the old stock at the dealers' end," Amit Kaushik,India MD of strategic consultancy firm UrbanScience, told HT.

But the dip in sales would be temporary. "We expect very strong bounce back in July."

Maruti Suzuki also had a week-long bi-annual maintenance shutdown mid June at its Manesar and Gurgaon plants. This also meant lesser production.

The largest carmaker in India, which shares almost half the passenger car market, also joined the bandwagon of automakers who passed on the GST benefit to the customers. While most of its cars have become cheaper by up to 3%, the Smart Hybrid Vehicles by Suzuki (SHVS) - Ertiga and Ciaz—have become more expensive by almost ₹1 lakh.

The new prices are effective from July 1, 2017, the company said in a statement.