The passenger vehicle segment in India is experiencing a period of robust growth. The reduction in tax rates following the implementation of GST 2.0 is directly impacting consumers and the sales of automobile companies. Major companies such as Maruti Suzuki, Hyundai, and Mahindra are seeing an increase in foot traffic at their showrooms. Bookings on Monday and Tuesday reportedly increased by approximately four times compared to previous weeks.
This surge in bookings can be attributed to several factors. Prior to the GST changes, companies intentionally reduced the number of new vehicles sent from factories in the initial three weeks of September. Dealers also focused on clearing old stock to create a fresh market environment following the tax cuts. The GST rate on small cars and SUVs under 4 meters has now been reduced to 18% (previously 28% tax and cess), providing consumers with a direct benefit of approximately 8.5% to 10%.
Additionally, the upcoming festivals of Navratri and Dhanteras-Diwali have further boosted demand. Initial reports indicate strong customer interest from the first day of Navratri. Sales are expected to be at least 50% higher compared to last year. There is a potential for sales to double if supply chain and financing challenges are promptly addressed.
Maruti Suzuki has reported an increase in daily bookings from 10,000 to 15,000 units. On the first day of Navratri alone, the company delivered 30,000 vehicles. Tata Motors also delivered 10,000 vehicles at the start of the festive season, demonstrating the positive impact of the GST reduction across the industry.