GST Reset On Wheels: Winners & Losers, 5 Points

Delhi

Key Highlights of GST Revision for Automobiles

1. Government’s Big Auto Push

   • India has revamped GST on automobiles and auto parts to boost demand.

   • Compensation Cess removed, making vehicles more affordable across categories.

   • 12% & 28% slabs scrapped; now only 5%, 18%, and new 40% GST slabs remain.

2. New GST Slabs for Automobiles

(A) 18% GST Slab – Mass Market Vehicles

• Cars (Petrol up to 1,200cc, Diesel up to 1,500cc, under 4m length)

• Hybrid, CNG, LNG vehicles

• Motorcycles up to 350cc

• Commercial vehicles (goods transport)

• Three-wheelers

• Tractors above 1,800cc

• Ambulances, buses

• Auto parts & tyres (except tractors)

(B) 5% GST Slab – Green & Rural Mobility

• Electric Vehicles (EVs)

• Tractors up to 1,800cc + parts, tyres & tubes

• Bicycles, cycles

• Tanks & armoured fighting vehicles

(C) 40% GST Slab – Luxury & Premium Segment

• High-end cars & SUVs (Petrol >1,200cc, Diesel >1,500cc, length >4m)

• Motorcycles above 350cc

• Station wagons, racing cars

3. Industry Beneficiaries

• Small Cars: Maruti Suzuki, Tata Motors, Hyundai

• Two-Wheelers (≤350cc): Hero MotoCorp, Bajaj Auto, TVS, Eicher

• Tractors: Mahindra & Mahindra, Escorts Kubota

• Three-Wheelers: Bajaj Auto, TVS

• Armoured Vehicles: Tata Motors, Bharat Forge

• Buses: Tata Motors, Ashok Leyland

• Tyres: Apollo Tyres, MRF, Ceat, Balkrishna Industries

• Auto Parts: Endurance, Belrise, Sona BLW, Motherson, Carraro

4. Stock Market & Sector Impact (CLSA View)

• Broad Benefit: Lower GST + no cess → Positive sentiment across auto industry.

• Entry-Level Cars: Tax cut from 29% → 18%.

• Two-Wheelers (≤350cc): Reduced from 28% → 18%.

• Commercial Vehicles: Down from 28% → 18%.

• SUVs & Premium Cars (>4m): From 50% → 40%.

• Tractors: No effective change (ITC adjustments).

• Big Bikes (>350cc): Tax hike from 31% → 40% (only negative impact).

5. Stock-Specific Winners

• Passenger Vehicles (PVs):

  • 🚀 Maruti Suzuki (biggest beneficiary)

  • Hyundai Motor India, Mahindra & Mahindra

  • Tata Motors – limited upside due to JLR & Tata Tech exposure

• Two-Wheelers (2Ws):

  • Hero MotoCorp, Bajaj Auto, TVS Motor → Major beneficiaries

  • Royal Enfield gains too (91% of volumes <350cc)

• Commercial Vehicles (CVs):

  • Ashok Leyland & Tata Motors to benefit