GST Reforms May Bring Vehicle Prices Down By Up To 8.5 Pc: Report

(MENAFN- IANS) New Delhi, Sep 4 (IANS) The government's decision to revamp the Goods and Services Tax (GST) structure with three slabs of 5 per cent, 18 per cent and 40 per cent will turn out to be a big benefit for automobile industry and customers as the prices across the segment would go down up to 8.5 per cent, a report said on Thursday.

"In the case of internal combustion engine (ICE) and hybrid vehicles, prices of entry-level hatchbacks, premium hatchbacks, compact sedans, and sub-compact sport utility vehicles (SUVs) with having less than 1,200 cc petrol or 1,500 cc diesel engines will decline about 8.5 per cent," Crisil Intelligence said in a report.

Meanwhile, prices of large sedans, compact SUVs, mid-SUVs, and multi-purpose vehicles (MPVs) below 1,500 cc will reduce by about 3.5 per cent.

Further, prices of premium SUVs and MPVs with over 1,500 cc engines will fall about 6.7 per cent, the report stated.

In the case of ICE two-wheelers, prices of almost all categories, except one, will reduce by about 7.8 per cent.

"Prices of premium two-wheelers with over 350 cc engine will increase about 6.9 per cent," the report stated.

In the case of ICE tractors and fuel cell motor vehicles, including hydrogen vehicles, prices will decline by about 6.3 per cent.

"Meanwhile, prices of three-wheelers, LCVs, MHCVs and buses will reduce about 7.8 per cent," according to the report.

The above analysis across segments does not consider any pass-through that may happen from automotive component manufacturers to original equipment manufacturers (OEMs) in the form of GST reduction, as all automotive components have been brought under the ambit of 18 per cent.

For a domestic sales perspective, in fiscal 2026, PVs may see a marginal uptick (lower single-digit growth), while two-wheelers could see higher single-digit growth.

Tractors will see a continued traction with 4-7 per cent growth, while CVs may see flattish-to-marginal-positive growth.

In the automobile industry, electric vehicles will continue to be taxed at 5 per cent, while other segments have undergone a rate revision to either 18 per cent or 40 per cent.

The automotive aftermarket segment will also benefit as all components will now be brought under the 18 per cent GST slab, thereby leading to a reduction in prices of components taxed at 28 per cent by about 7.8 per cent, the report said.

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