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Indian auto buyers are postponing purchases in anticipation of a GST rate cut that could slash vehicle prices by up to 10% before Diwali
From Cars to Trucks: GST Cut May Rev Up Demand Across Auto Segment
Indian auto buyers are postponing purchases in anticipation of a GST rate cut that could slash vehicle prices by up to 10% before Diwali. With the GST Council meeting scheduled for September 3–4, the expectation of lower taxes is creating a peculiar market trend: demand is currently soft. Still, it could rebound sharply in the festive season.
Jefferies Sees Big Boost In 2Ws And Small Cars
“Consumers are deferring purchases ahead of a potential GST cut, but lower taxes could provide a significant demand boost, especially in 2Ws and small PVs,” Jefferies noted. Early signs are visible in auto registration trends—tractors surged 32% in August MTD, two-wheelers and trucks rose 6–7%, while passenger vehicles grew just 1%.
Proposed Tax Structure
The new GST model would simplify auto taxation—most segments may move from 28% to 18%, EVs and tractors to 5%, while only luxury cars would remain in the 40% slab.
Company Outlook And Stock Picks
Jefferies expects August wholesales to rise 8–13% YoY for Eicher Motors, M&M, and TVS, while others may remain flattish (-5% to +1%). Nomura projects a 5–10% demand increase with the multiplier effect of the cut. Potential price drops include WagonR (9%), Bolero (10%), Brezza (3%), Creta (3%), and XUV700 (7%).
Brokerages are bullish on select stocks—Jefferies prefers M&M, TVS, Maruti, and Eicher, while Nomura highlights M&M, Maruti, Ashok Leyland, and TVS. Motilal Oswal sees Maruti (68% exposure) and M&M (52%) well-placed in small cars.
Policy Urgency Before The Festive Season
Auto demand has been sluggish—registrations rose just 2–3% YoY in April–July for 2Ws and PVs, trucks declined 3%, while tractors grew 7%. Nomura warned that “sales have slowed substantially in anticipation of tax cuts,” urging quick decisions. The GST Council meeting has been advanced to prevent the industry from losing critical festive sales starting September.
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a…Read More
Aparna Deb is a Subeditor and writes for the business vertical of News18.com. She has a nose for news that matters. She is inquisitive and curious about things. Among other things, financial markets, economy, a… Read More
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