M&M cushions dealers from cess blow; others likely to follow suit

Mahindra & Mahindra (M&M) has extended relief to its dealers as the industry faces a potential ₹2,500 crore hit due to the removal of compensation cess on luxury cars.

- SHINE JACOB

The company has agreed to offer incentives that would offset the loss of the cess, according to industry sources.

The Federation of Automobile Dealers Associations (Fada) said other manufacturers have also indicated plans to follow suit, offering similar support to dealers sitting on inventories of around 600,000 vehicles stocked up in anticipation of the festival season surge.

The industry body had earlier appealed to Union Finance Minister Nirmala Sitharaman to transfer the balance in the compensation cess credit ledger by September 21 to the IGST/CGST credit ledger, in a bid to prevent festival sales from being hit.

"M&M has taken the lead. A couple of other companies have also given indications that they will line up offers that will insulate us from the loss of compensation cess.

It will be through offers or discounts that match the loss," said CS Vigneshwar, president, Fada.

M&M did not respond to queries from Business Standard.

Almost all major original equipment manufacturers including Maruti, Hyundai, M&M, Tata Motors, Toyota, Skoda, Renault, BMW, and Mercedes have already announced price reductions ranging from ₹65,000 to 8.9 lakh, passing on the benefits of GST reforms to customers.