Two-wheeler sales are expected to grow by 5-6 per cent this fiscal, aided by the GST Council’s recent tax rationalisation, according to a report by Crisil Ratings. Passenger vehicles (PVs) are forecast to see a modest 2-3 per cent rise.As per news agency ANI, Crisil said the rate reduction would lift demand in the auto sector, which has been under pressure in recent months. Two-wheelers and PVs, together accounting for nearly 90 per cent of industry volumes, are expected to see demand increase by 200 basis points and 100 basis points, respectively.Sales in the two-wheeler segment had slowed in the first quarter due to the impact of new On-Board Diagnostics II norms and weak rural demand following the early and intense monsoon. For PVs, affordability issues and purchase delays had weighed on sales.“With the GST cut fully passed on, vehicle prices are expected to drop 5-10 per cent (Rs 30,000–60,000 on small PVs; Rs 3,000–7,000 on two-wheelers). With the rate cut coinciding with the Navratri and the festive season, sentiment would get a timely boost. Coupled with new launches, softer interest rates and improved affordability, this should drive a stronger second half for the automobile sector,” said Anuj Sethi, senior director, Crisil Ratings, as quoted by ANI.Under the revised GST structure, effective September 22, rates on small PVs, two-wheelers up to 350cc, commercial vehicles and three-wheelers will drop to 18 per cent from 28 per cent. Mid and larger PVs will see a 3–7 per cent cut, while tractors will benefit from reductions to 5 per cent and 18 per cent, down from 12 and 28 per cent.However, motorcycles above 350cc will face a steeper levy of 40 per cent, compared to the current 31 per cent.As per PTI, auto industry leaders welcomed the move. Skoda Auto Volkswagen India CEO & MD Piyush Arora said the shift to an 18 per cent slab for small cars will boost affordability in the high-volume segment, while the 40 per cent slab for premium vehicles “provides clarity and simplifies taxation.” Kia India also said the reform will stimulate demand across segments.Finance minister Nirmala Sitharaman has described the GST overhaul as a “people’s reform,” saying that it will benefit households and the economy at large by lowering costs and spurring consumption.
