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Car Demand Tumbles Over Rise In Sales Tax

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Swati Prasad BSCAL
Last Updated : May 24 2000 | 12:00 AM IST

Waiting lists of passenger cars have fallen dramatically as a result of a clear slowing down of demand in April and May for most car manufacturers. Barring Wagon R and Esteem, the other Maruti cars -- Maruti 800, Zen, Omni, Gypsy and Baleno -- are available off-the-shelf, confirm Maruti dealers. The waiting period for Hyundai Santro has also come down drastically.

"At all Maruti dealerships, most models are available off-the-shelf as they have ample stocks," said a Maruti dealer. the company is having some problem with the supply of parts for Wagon R and Esteem and therefore there is a longer waiting period (of seven to ten days) on these cars, they adding. On Esteem VX, the waiting period could be as long as a month. "The longer waiting period on Esteem and Wagon R is primarily due to supply constraints and has remained unchanged after the increase in sales tax," he added.

Maruti Udyog Ltd's Jagdish Khattar had recently said the company is switching to five days a week because of slackening demand for its passenger cars after the increase in sales tax. MUL produces around 1,550 cars a day.

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Meanwhile, the waiting period for a Hyundai Santro has come down from five weeks (in northern states) prior to the increase in sales tax to 12 to 15 days, depending on the model the buyer goes for.

B V R Subbu, director, marketing, Hyundai Motor India Ltd (HMIL), said over the next few days, the waiting period for Santro would come down to a week. "Ideally, we would want the waiting period to remain at that," Subbu said. He said unlike MUL, Hyundai will not require to cut production.

"Even though there is a drop in sales, particularly in Gujarat and Madhya Pradesh, we will sell almost the same number of cars this month, compared to April, if not more," Subbu added.

Young-Chang Kim, managing director, Daewoo Motors India Ltd, said the impact of the sales tax increase on DMIL's vehicles is `less than five per cent'. In northern India, Matiz has been available off-the-shelf since March, he said.

Despite a slump, DMIL is stepping up production. "Till now, we have some pending orders. However, from next month, we will step up production and there won't be any backlog," Kim said.

The DMIL plant in Surajpur will be closed for maintenance next month and from July, the company will increase production to 7,000 cars a month. Kim hopes that `the demand for Matiz would go up'. The maximum number of Matiz's the company has sold was in December last -- 6,900.

A Telco official said most dealers have liquidated stock as they sold off cars prior to April 15, when the sales tax was increased in the Capital. "It's still early days to talk about a slackening in demand," the official said, adding that the waiting period for an Indica is around seven to eight days.

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First Published: May 24 2000 | 12:00 AM IST

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