Kotak Institutional Equities expects GST rejig to reduce the on-road price of most cars by 5 – 8%.
Carmakers, including Tata Motors, Mahindra & Mahindra, Renault India, and Maruti Suzuki, have announced significant price cuts on their vehicles following the GST Council’s decision to lower rates for most vehicle categories to 18%, with some segments attracting a flat 40% tax.
The GST Council reduced tax rates from 28% to 18% on small petrol, diesel, LPG, CNG, and hybrid cars with a length of under 4,000 mm, a segment that accounts for most vehicle sales in India. Meanwhile, the tax has been raised to 40% for larger and premium vehicles, while the 5% rate on electric cars remains unchanged.
According to Kotak Institutional Equities, these changes are expected to reduce the on-road price of most cars by 5 – 8%.
Mahindra & Mahindra
M&M declared price cuts of up to ₹1.56 lakh for its internal combustion engine (ICE) models. SUVs like the XUV 3XO, Scorpio N, and XUV700 will see reductions ranging between ₹1.01 lakh and ₹1.56 lakh. The automaker cut THAR’s cost by ₹1.01 lakh.
Mahindra’s stock was up 1.7% at ₹3,621.9. It was the third-highest trending stock on Stocktwits.
Tata Motors
Tata Motors will slash passenger vehicle prices by ₹75,000 to ₹1.45 lakh, effective September 22. The cuts apply across its portfolio, with smaller cars like Tiago now starting at ₹4,99,990, the Nexon reduced by ₹1.55 lakh to ₹7,99,990, and the Safari lowered by ₹1.45 lakh to ₹15,49,990.
Tata Motors was trading 1.9% higher at ₹705.
Hyundai
Hyundai Motor India announced price cuts of up to ₹2.4 lakh across its lineup. Models like the Verna, i20, Alcazar, Creta, Venue, and Tucson will all see significant reductions, with the Verna becoming cheaper by ₹60,640 and the Tucson by as much as ₹2,40,303.
The stock was down 0.3% at ₹2,534.9.
Renault India
Renault India cut prices by up to ₹96,395 across its lineup, including the Kwid, Kiger, and Triber models.
Maruti Suzuki
Maruti Suzuki’s smaller cars, such as the Alto and Wagon R, may become significantly cheaper due to GST cuts, chairman RC Bhargava said last week. Alto may become cheaper by ₹40,000 – ₹50,000, and Wagon R by ₹60,000 – ₹67,000. Both models fall within the sub-1200cc category.
“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.”
Maruti’s shares were down 0.2% at ₹14,867, in early trade.
Analyst Take
SEBI-registered investment advisor Trade Bond expects Maruti to follow suit soon with price cuts.
He added that the GST benefit will act as a strong trigger for the next leg of the consumption rally, and advised investors to stay focused on auto, cement, FMCG, and hotel sectors for medium-term gains.
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