Tax cut anticipation weighs on India passenger vehicle sales in Aug, say brokerages

Ashok Leyland

02/09/2025 06:20

** India's passenger vehicle (PV) sales remain weak in August, partly due to anticipated tax cuts, say brokerages

** Proposed cuts include slashing taxes on small petrol hybrid cars to 18% from 28%

** Some customers deferred purchases due to GST-cut anticipation, says Nomura

** Adds, tractors and two-wheelers logged limited impact as buyers "not fully aware of news around potential GST cuts"

** Forecasts FY26 volume growth of 3%/5% for PVs/two-wheelers, with 5–10% upside post-GST cuts, benefiting Mahindra and Mahindra MAHM.NS and Ashok Leyland ASOK.NS the most

** Festive season advancing by 10 days vs 2024 led to early inventory build-up, but GST uncertainty caused purchase deferments and cautious PV stocking - Citi

** GST cuts, in addition to reviving weakening demand, will spur premiumisation as customers use the windfall gains to trade up - UBS

** YTD auto index .NIFTYAUTO up 12.4% vs Nifty 50 .NSEI rise of 4.5%

 (Reporting by Urvi Dugar)

 ((UrviManoj.Dugar@thomsonreuters.com;))