By Motilal Oswal

Copyright indiatimes

ANIAuto sector discounts to trend down as GST cuts set to lift demand: Motilal Oswal

If you are postponing your next car or bike purchase in the hope of getting even bigger discounts after the recent GST cuts, you might be in for a surprise. A new report by Motilal Oswal suggests that car and two-wheeler makers are likely to either reduce discounts or stop offering them altogether in the coming months.As per the report, with demand picking up, discounts across categories are expected to trend lower, which will help automakers improve their profit margins. “With a pick-up in demand, we also expect discounts to trend down across key segments, which should drive margin expansion going ahead,” it stated. On the back of this expected demand revival and stronger earnings growth, Motilal Oswal has revised its volume growth forecasts upward for all major automobile segments for FY26 and FY27. The premiumisation trend — where consumers increasingly opt for higher-end models — is expected to continue. However, the report also notes that demand for small cars is likely to rise from a very low base, contributing to the overall market recovery. According to the revised estimates, two-wheeler sales are now expected to grow 4% in FY26 and 7.5% in FY27, compared to the earlier forecast of 1% and 5.7%. Passenger vehicle volumes are projected to increase 3% in FY26 and 8% in FY27, higher than the previous estimate of 2% and 4%. Commercial vehicles are now forecast to grow 5% in FY26 and 7% in FY27, while tractor sales are expected to rise 10% in FY26 and 6% in FY27.Live Events A major driver behind this positive outlook is the GST Council’s decision to slash tax rates for most auto segments to 18% from 28%, effective September 22, 2025. For SUVs above 4 metres, GST has been reduced to 40% (without cess) from the earlier 43-50% range, while tractors and tractor components now attract just 5% GST, down from 12-18%. These tax cuts, combined with factors such as a normal monsoon, lower interest rates (down nearly 100 basis points so far this year), and recent income tax benefits, are expected to boost demand significantly during the upcoming festive season. Most automakers have already announced the revised prices, with some popular models getting significantly cheaper. For instance, several Tata Motors and M&M cars have gone cheaper to up to Rs 1.5 lakh while the biggest reduction in Toyota Fortuner has gone cheaper by upto Rs 3.49 lakh. The Hyundai Tucson has gone cheaper by Rs 2.4 lakh. Maruti too has announced revised prices and its cars have now gone cheaper by up to Rs 1.2 lakh.Add as a Reliable and Trusted News Source Add Now!
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