The Indian auto industry is experiencing mixed results across various segments, with two-wheelers maintaining strong momentum while passenger vehicles face challenges. Recent sales data and corporate announcements paint a nuanced picture of the sector's performance and future outlook.

Two-Wheeler Segment Maintains Momentum

Hero MotoCorp and TVS Motor Company are leading the charge in the two-wheeler segment, buoyed by robust rural demand and solid export performance. According to the latest press release from Hero MotoCorp, the company dispatched 553,727 motorcycles and scooters, marking an 8% growth compared to the same month in the previous year.

Hero MotoCorp's performance breakdown:

Bajaj Auto has also shown strength in exports, despite facing domestic EV production losses. The company's VIDA brand, focused on electric vehicles, has shown promising growth with dispatches of 12,275 units and 13,313 VAHAN registrations.

Passenger Vehicles Face Headwinds

In contrast to the two-wheeler segment, passenger vehicles have disappointed. Mahindra & Mahindra posted its first negative sales of the calendar year, while Tata Motors struggled in the passenger vehicle segment. The SUV market, previously a growth driver, has also shown signs of weakening.

Commercial Vehicles and Tractors Show Promise

The commercial vehicle segment is displaying signs of improvement, with Ashok Leyland and Tata Motors showing recovery. The tractor segment has performed strongly, with Mahindra & Mahindra and Escorts benefiting from seasonal factors and positive rural sentiment.

Industry Outlook and Potential GST Impact

Market expert Ashwin Patil anticipates that a proposed GST cut on automobiles could drive demand revival. Customers are currently delaying purchases in anticipation of lower rates. The potential 5% GST slab reduction could particularly benefit lower-end passenger cars and entry-level two-wheelers.

Hero MotoCorp's press release echoes this optimism, stating, "Optimistic market sentiment is anticipated for the festive season, driven by favorable monsoons, an increase in agricultural demand, and a projected boost in overall consumption due to impending GST reforms."

New Product Launches

Hero MotoCorp has launched the all-new Glamour X 125, described as India's most futuristic 125cc motorcycle. Available in two variants - Drum at INR 89,999 and Disc at INR 99,999 (ex-showroom Delhi) - the new model aims to redefine the Deluxe 125cc segment with category-first innovations.

The combination of potential GST reduction and the upcoming festive season could trigger sharp rebounds for the auto industry. As the sector navigates through these mixed results, all eyes will be on government policies and consumer sentiment in the coming months.

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.