The road is clear for one of the strongest festive seasons for the automobile industry, with sales expected to jump more than 20% over last year, on the back of a reduction in the goods and service tax (GST).
Dealers across categories have projected volumes of over 5.2 million units in the 42-day period that begins with Navratri on September 22 and runs until a fortnight after Dhanteras, a significant jump from the 4.28 million units sold in the same stretch last year.
The latest round of GST rationalisation has pulled down vehicle prices to a range that few customers can ignore. Mass market cars and SUVs have become cheaper by Rs 40,000-Rs 1,55,000, thanks to the tax rate being cut from 28% to 18%. Prices of larger vehicles — above 1,200 cc petrol and 1,500 cc diesel — with length of over 4 metres will also come down, since they will now attract 40% GST compared to 43-50% earlier including cess.
Therefore, prices of luxury vehicles from Mercedes-Benz, BMW, Jaguar Land Rover (JLR), Audi and Volvo will also drop by as much as Rs 30 lakh. The ministry of heavy industries has even directed manufacturers to showcase ‘old vs new’ price comparisons prominently at showrooms.
Dealers say the demand momentum has already started to build even before the formal festive window kicks in. “This will be a record year, no doubt about it. It’s only during the last couple of days when the message about the GST cut has been passed on to the market, that we have started to see a surge in demand,” a Raipur-based dealer of Honda and Tata Motors, said on the sidelines of the Federation of Automobile Dealers Association’s (FADA) Auto Retail Conclave.
Luxury retailers are equally upbeat. “The demand is upbeat. Jaguar Land Rover is now waiting for September 22 for the new prices to take effect, it has begun liquidating its current inventory at the reformed GST rates. This will be a record period for the industry. Booking numbers are looking very robust despite the ongoing Shraadh period,” a senior JLR dealer executive said.
The industry is entering the season with a comfortable stockpile. Passenger vehicle makers currently hold around 600,000 units in inventory, while the two-wheeler segment has between 280,000 and 450,000 units. OEMs are expected to step up production further to ensure supply keeps pace with the surge in demand during the crucial season, which usually contributes about 15% of annual volumes.
The auto market has been on a steady upturn. In FY25, total sales reached 25.6 million units, growing 7% over the 23.85 million recorded in FY24. With the festive boost riding on the back of the GST cut, industry executives and dealer networks now expect FY26 to close higher.
Source: financialexpress
