Synopsis:
The proposed GST cut from 28% to 18%, with luxury cars in a 40% slab, could lower vehicle prices, boost affordability, and revive demand.
The government’s proposed GST reform has caught the spotlight in the auto market, sparking excitement among both buyers and investors. The plan suggests reducing the current 28% GST rate on automobiles to 18%, while keeping luxury cars in a new 40% slab. If approved, this could drastically cut down the on-road prices of popular vehicles, making them more affordable for middle-class buyers.
This move would not only reduce the acquisition cost of vehicles but could also give a much-needed boost to auto sales after years of slow demand. Entry-level cars could see meaningful price drops, while two-wheelers less than 350 CC may also become cheaper.
With cheaper entry-level models and renewed buyer interest, auto giants including Hero MotoCorp, Maruti Suzuki, Eicher Motors, and M&M could witness strong sales recovery and renewed investor interest.
Analyst Opinion
Analysts see a strong upside for auto sales if tax cuts or GST reduction measures are announced. Morgan Stanley highlighted that a similar move in 2008 had lifted automobile demand by nearly 20%, and it expects a repeat this time. It believes Hero MotoCorp and Eicher Motors will be the biggest gainers in two-wheelers, while Maruti Suzuki and M&M will benefit most in passenger vehicles.
Emkay pointed out that Hero MotoCorp, with a dominant 79% share in entry-level bikes, and TVS Motor, which controls about 25% of the scooter market, are well-positioned to see demand rise. It also expects auto parts suppliers such as Pricol, Sandhar Technologies, and ASK Automotive to benefit as volumes pick up. Motilal Oswal added that Maruti Suzuki and Tata Motors, whose cars currently fall in the 28% GST slab, could see significant relief if rates are cut to 18%.
Nomura noted that a 10% GST cut could boost demand by 15–20%. However, it cautioned that cheaper ICE vehicles could slow down electric vehicle adoption, though companies like M&M, Hero MotoCorp, and Ashok Leyland may still emerge as big winners.
Here are the 2-wheeler and Entry-level car stocks that are likely to benefit the most from a 10% GST cut
| Company Name | Current Price | Intraday High (%) |
| Hero MotoCorp Limited | 4991.7 | 8.71% |
| Ashok Leyland Ltd | 131.9 | 8.90% |
| Mahindra & Mahindra Ltd | 3393.2 | 5.04% |
| Maruti Suzuki India Ltd | 14045 | 9.28% |
| Eicher Motors Ltd | 5911.35 | 4.53% |
| Tata Motors Ltd | 678.35 | 3.07% |
| Pricol Ltd | 444.4 | 3.96% |
| Sandhar Technologies Limited | 427 | 5.74% |
| ASK Automotive Ltd | 506.15 | 6.82% |
| TVS Motor Company Ltd | 3219.1 | 7.72% |
Conclusion: The proposed GST cut from 28% to 18% could sharply reduce vehicle prices, boosting demand across two-wheelers and passenger vehicles. Analysts highlight Hero MotoCorp, Maruti Suzuki, M&M, and Eicher Motors as key beneficiaries, with auto ancillaries also set to gain.
Written By – Nikhil Naik
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