Auto Industry Anticipates GST Rate Cuts, Maruti Suzuki and Hero MotoCorp Poised to Benefit
The Indian automotive industry is expecting GST rate reductions by Diwali, potentially benefiting various segments. Entry-level cars may see rates drop to 18%, while premium vehicles could experience 8-10% reductions from the current 50% rate. Maruti Suzuki and Hero MotoCorp are positioned as major beneficiaries due to their exposure to entry-level segments. The sector is experiencing a temporary decline in bookings as customers delay purchases in anticipation of lower rates. Dealers and manufacturers face challenges with thin profit margins and cannot offer pre-emptive discounts. The GST Council's decision is expected within 15-20 days, potentially reshaping the competitive landscape in the Indian automotive market.

*this image is generated using AI for illustrative purposes only.
The Indian automotive sector is bracing for potential tax reforms as the GST Council is expected to announce new rates by Diwali, potentially bringing significant benefits to the industry. The anticipated changes have led to a temporary slowdown in bookings, as customers delay purchases in hopes of benefiting from the expected GST rate reductions.
Expected GST Rate Changes
The proposed tax reforms are expected to bring substantial relief to various segments of the auto industry:
- Entry-level cars: GST rates likely to drop to 18%
- Premium vehicles: Currently taxed at around 50% GST, could see 8-10% reductions
Impact on Major Players
Maruti Suzuki India and Hero MotoCorp are positioned as the biggest potential beneficiaries of these tax reforms, primarily due to their higher exposure to entry-level segments. These companies could see increased demand and potentially improved profit margins if the GST rates are reduced as expected.
Segment-wise Benefits
- Passenger vehicles and two-wheelers: Expected to benefit the most from the GST rate cuts
- Commercial vehicles: May see limited impact due to input tax considerations
Current Market Scenario
The auto sector is currently experiencing a temporary decline in bookings. This slowdown is attributed to customers postponing their purchases in anticipation of the GST rate reductions. The announcement of new rates is potentially expected within the next 15-20 days.
Challenges for Dealers and Manufacturers
Despite the potential for increased sales following the GST rate cuts, auto dealers and manufacturers are currently in a difficult position:
- Unable to offer pre-emptive discounts due to thin profit margins
- Facing a temporary slowdown in sales as customers wait for the new rates
Maruti Suzuki's Recent Development
While not directly related to the GST rate cuts, it's worth noting that Maruti Suzuki India Limited has a pending case with the Competition Commission of India (CCI). According to the company's recent LODR filing:
- The next hearing at the National Company Law Appellate Tribunal (NCLAT) is scheduled for September 18, 2025
- This ongoing legal matter could potentially impact the company's operations and should be monitored alongside the anticipated GST reforms
As the auto industry awaits the GST Council's decision, the potential tax reforms could reshape the competitive landscape, with companies like Maruti Suzuki and Hero MotoCorp well-positioned to capitalize on the changes. The coming weeks will be crucial for both manufacturers and consumers in the Indian automotive market.