GST Reductions Ignite Festive Car Sales Surge in Chennai

With new Goods and Services Tax (GST) rates taking effect, car dealerships in Chennai are leveraging the tax benefits to boost sales during the festive period. At the Maruti showroom, the draw for consumers includes reduced prices as a result of the GST rationalisation.

Showroom manager Sivaraj reported that over 2,000 cars have been booked in September alone due to the lowered tax slabs. 'More than 2,000 bookings have occurred this past month because of the GST rate cut. The new prices are now in place,' Sivaraj told ANI.

Car prices are seeing significant drops, with the cost of an entry-level vehicle falling from 4.5 lakhs to 3.4 lakhs. An additional Diwali offer has been introduced, potentially swaying consumers towards purchasing a car rather than a two-wheeler, as noted by the manager.

Sivaraj emphasized that these GST cuts have vastly improved affordability. 'A car can now be purchased for 4.5 lakhs, while a two-wheeler costs about 2 lakhs. With just 2 lakhs more, a consumer can buy a car—a substantial benefit from the GST reduction,' he added. He anticipates a market boom in the automotive industry.

The government has considerably reduced GST rates for the auto sector, declining from 28% to 18%, and from 45% to 40% for larger vehicles, instigating a favorable environment for car buyers. As a major manufacturer holding a 53% market share, selling over 1.5 lakh cars monthly, the impact is profound.

The Motilal Oswal report forecasts declining discounts as demand and earnings grow, aligning with a recovery in small car demand and continued premiumisation trends. As GST cuts lift demand, automakers are poised for an upswing in margins.