Should you buy a new car before GST rolls out?

Mass market cars are expected to get costlier post GST while luxury cars are set to get more affordable. With carmakers offering juicy deals on cars, is it the right time to sign the dotted line?

We’re still a fortnight away from GST rollout and the car market in India is almost as hot as it is during the festive season. Carmakers are offering attractive discounts amounting up to a lakh rupee on some sub-Rs 10 lakh cars. As buyers, we were not prepared for all this so there’s a confusion on whether one should prepone his car purchase to make the most of this situation or just sit back and see the discount wave settle.

For buyers planning to buy a mass market car:

It’s a win-win situation for those who were at the verge of a new car purchase so try to squeeze as much discount as possible. The good thing is that the dealers and carmakers are more inclined to sell you a new car now than you are to buy one. However, consider this situation as stock clearance and don’t delay your purchase.

Those who were planning a new car purchase in the upcoming festive season can also make use of this early opportunity. Post GST, budget and mass market cars may see an upward revision in prices ranging anywhere between 3-5%. For a Rs 5 lakh car, that would be around Rs 15,000 to Rs 25,000. As a market trend, car prices head slightly north before the festive season. So even if carmakers end up offering as good deals as they’re offering now, the same car will cost you more.

There’s another catch here. If you were planning to exchange your existing car for a new car, you MUST try to cash in on this opportunity. It’s tough to gauge GST’s impact on the used car market. Majority of the used car space runs in a semi-organised or unorganised fashion in India. Post GST, a used car sale is expected to attract a higher tax percentage. In order to maintain an attractive resale price, the only option used car dealers will be left with is to buy the cars at lower prices.

For buyers planning to buy a luxury car or a full size SUV:

Our calculations based on proposed GST rates reveal that prices of luxury cars and SUVs post GST may come down by 1.5% to 4.5%. So, a car that costs Rs 50 lakh now will see the price coming down anywhere between Rs 50,000 to Rs 2.5 lakh. If you’re getting a better deal now on the car of your choice, go ahead with your purchase.

For the deep thinkers - Wondering why are mass carmakers offering deals on cars that are set to cost high post GST? The reason is that they’re trying to liquidate their stock so as to reduce the paperwork and maintain a cleaner balance sheet. This time around the discounts are genuine and it’s best to make the most of this opportunity.

Discounts on offer:

Maruti Suzuki: Between Rs 25,000 and Rs 35,000

Mahindra: Between Rs 27,000 and Rs 90,000

Hyundai: Between Rs 25,000 and Rs 2.5 lakh

Honda: Between Rs 14,500 and Rs 60,000

Ford: Between Rs 10,000 and Rs 30,000

Nissan: Between Rs 25,000 and Rs 80,000

Audi: Upto Rs 10 lakh

BMW: Upto 12 per cent on ex-showroom prices

Mercedes-Benz: Upto Rs 7 lakh

Jaguar-Land Rover: Upto Rs 10.9 lakh

Source: CarDekho.com