GST Cut Fuels Growth in Commercial Vehicle Sector: Ashok Leyland's Strategic Advantage
The Goods and Services Tax (GST) reduction is expected to revitalize the commercial vehicles (CV) sector, according to Ashok Leyland CEO Shenu Agarwal. The tax cut will drive replacement demand by lowering prices and increasing freight activity. This strategic move is also anticipated to rejuvenate ageing fleet replacement in the auto industry.
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- India
The recent reduction in the Goods and Services Tax (GST) for the auto sector is poised to spark a significant uptick in the commercial vehicles segment, Ashok Leyland's MD & CEO Shenu Agarwal stated on Thursday. Speaking at the Society of Indian Automobile Manufacturers (SIAM) annual convention, he highlighted the considerable benefits awaiting this sector.
With GST cuts affecting consumers and businesses nationwide, a predicted boost in consumption could ramp up freight activities, consequently increasing the demand for commercial vehicles. Agarwal emphasized that the commercial vehicle sector stands to gain the most from this tax reduction, positioning it as a potential catalyst for long-awaited replacement demand.
This shift could see ageing fleets being replaced, as the current average fleet age is ten years, surpassing the historical norm of seven to eight years. Ashok Leyland is preparing for increased production to meet anticipated demand, with a Rs 120 crore investment aimed at expanding its bus production capacity.
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