Two-Wheeler Sales Expected to Rise 5–6% After GST Cuts
Credit rating agency CRISIL Ratings has projected that the reduction in Goods and Services Tax (GST) rates on automobiles will drive demand, with two-wheeler sales expected to rise by 5–6% and passenger vehicle sales by 2–3% in the current financial year.
Impact on Vehicle Prices
CRISIL estimates that if the full benefit of GST cuts is passed on to consumers, vehicle prices could fall by 5–10%.
- Small Passenger Vehicles: Prices may drop by ₹30,000–₹60,000.
- Two-Wheelers: Prices may decline by ₹3,000–₹7,000.
Analysts note that the price reductions coincide with the festive season, further boosting consumer sentiment.
Positive Outlook for the Sector
Anuj Sethi, Senior Director at CRISIL Ratings, said that the timing of GST cuts during the Navratri and Diwali season is likely to significantly revive automobile demand. “The sector is expected to see robust growth in the second half of the year, supported by lower costs, new launches, and improved financing options,” he stated.
Market Share Advantage
According to CRISIL, two-wheelers and passenger vehicles together account for nearly 90% of India’s automobile sales. Demand for two-wheelers could rise by 200 basis points, while passenger vehicles may see a rise of 100 basis points following the GST cut.
Outlook
Experts believe the reduction will not only increase affordability for middle-class buyers but also help manufacturers clear inventories and ramp up production. As a result, the automobile sector is expected to record stronger growth momentum, with two-wheeler sales leading the recovery.
