The cars fall in the sub-1200 cc category, which will benefit from a GST cut to 18% from 28%
Maruti Suzuki’s smaller cars, such as the Alto and Wagon R, may become significantly cheaper due to GST cuts, said RC Bhargava, chairman of Maruti Suzuki, in a conversation with Business Standard.
Alto may become cheaper by ₹40,000 – ₹50,000, and Wagon R by ₹60,000 – ₹67,000. Both these models are in the sub-1200cc category, which will benefit from the reduction of GST.
“With the latest GST reduction, we project that the small car market, which was degrowing, will now grow this year by over 10 per cent,” Bhargava said.
“As a result, the overall passenger car market should grow by 6% – 8%. There is a general feeling of euphoria with interest rates coming down, income tax benefits, and now GST, which will help consumers to have more money to increase consumption.”
According to the report, Bhargava expects car prices to potentially reduce by 9%, considering the council’s decision doesn’t impact automakers’ transportation costs and dealer margins.
GST Slashed For Smaller Cars
On Wednesday, the GST Council approved reducing GST on small cars to 18% from 28%.
The GST on petrol, petrol-hybrid, LPG, diesel, and diesel-hybrid cars with an engine capacity of up to 1500 cc and a length of up to 4000 mm, as well as CNG cars with an engine capacity of up to 1200 cc and a length of up to 4000 mm, has been reduced from 28% to 18%.
The majority of vehicle sales in the country fall under this category.
GST has been increased to 40% for larger and premium passenger vehicles, covering petrol or hybrid cars above 1200cc or longer than 4,000 mm, diesel or hybrid cars above 1500cc or 4,000 mm, as well as motorcycles exceeding 350cc.
The council retained the 5% GST rate on electric vehicles (EVs).
Stock Watch
Maruti Suzuki shares reversed early gains and are currently trading 1.8% lower at ₹14,661, underperforming the Nifty Auto Index’s 0.8% gains.
Year-to-date, the stock has gained more than a third of its total value.
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