SIAM convention: Auto industry says sales momentum would continue even after festive period because of GST 2.0

Domestic passenger vehicle (PV) sales have slowed down in the past couple of years, specially in the small car segment due to affordability issues.
| Photo Credit:
 B Jothi Ramalingam

The auto industry on Thursday said that sales boost by the GST rate cut will last beyond the festival season and may stretch right up to the first half of the next year.

Companies including Maruti Suzuki India (MSIL) and Hyundai Motor India (HMIL) said they were hopeful that the growth moment would continue till next year, taking the industry growth to 7 per cent.

“The long-term growth CAGR, which used to be around 7 per cent for the Indian auto industry, we feel, will go back to that again from 2026-27,” Partho Banerjee, Senior Executive Officer, Marketing and Sales, MSIL told reporters here on the sidelines of the 65th SIAM annual convention.

Domestic passenger vehicle (PV) sales have slowed down in the past couple of years, specially in the small car segment due to affordability issues.

As per industry estimates, during April-August period this financial year, PV sales were at around 17.05 lakh units as compared to 17.31 lakh units in the year-ago period.

Banerjee said that sales are expected to bounce back in the later part of the ongoing fiscal after the GST rate reduction. He however, also added that enquiries have grown by 15 per cent despite being in the “inauspicious period” of Shraadh, and the market sentiment is buoyant.

Similarly, Unsoo Kim, Managing Director, HMIL said that the GST overhaul will further energise the automotive sector, aligning seamlessly with the ‘Make in India’ vision, by encouraging domestic manufacturing and stimulating demand across both urban and rural markets.

“By reducing the tax burden on essential goods, the government has laid the foundation for inclusive growth and a consumption-led economy… we expect a surge in consumer sentiment during the upcoming festive season, and an overall growth in both short term and long term,” he noted.

He also said growth in GDP and continuous positive sentiments among the consumers, the industry is expected to continue the growth momentum, even after the festive season.

Hard to predict

Meanwhile, when asked about long-term growth momentum because of the GST cuts, SUVs maker Mahindra & Mahindra (M&M) said that it was hard to predict at this point in time.

“Anecdotally from what we have seen in the previous times any of these changes like VAT, there has been strong response from the market in terms of the product. But, the question is which part of the segment of the market is it going to affect – it is hard to say at this point in time,” Nalinikanth Gollagunta, CEO, M&M Automotive Division, said.

For commercial vehicle (CV) segment, Shenu Agarwal, MD and CEO, Ashok Leyland said that the new GST rates will result in a boost in consumption thereby increasing freight traffic and ultimately demand for CVs.

“CV will be actually the biggest beneficiary among the automotive sector,” Agarwal said adding that rate rationalisation will lead to price cuts and customers who have withheld purchases will come back to the market, one big aspect is of the replacement of ageing fleets.

“We have been discussing this issue of ageing of fleets in the country… the average age of the fleet is about 10 years. Historically, it has never been more than seven, eight years,” Agarwal added.

Published on September 11, 2025

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