Luxury car makers seek GST clarity ahead of festive season
What's the story
Luxury car manufacturers are urging the government to provide clarity on Goods and Services Tax (GST) rates, ahead of the festive season. The call comes as the high-powered GST Council is set to meet on September 3-4, to discuss a potential shift toward a two-slab taxation system. BMW Group India President and CEO Hardeep Singh Brar said that uncertainty over possible changes in GST rates has left consumers confused.
Sales impact
Potential buyers taking wait-and-watch approach
Brar noted that while consumer interest and demand remain strong, potential buyers are taking a wait-and-watch approach due to the uncertainty over GST rates. This delayed decision-making process is having an adverse effect on new vehicle sales. He stressed that "expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust."
EV concerns
BMW ready to launch multiple model trims
Brar also expressed hope that the push for electric vehicles (EVs) will continue to be prioritized in the GST strategy by keeping the current 5% GST on all passenger EVs. He warned that any adverse impact from GST rates could derail India's vision of high electric adoption and local production. Despite these challenges, Brar said BMW Group India is ready to launch multiple model trims during this festive season.
Market expectations
Mercedes-Benz, Audi India optimistic about upcoming festive season
Audi India Head Balbir Singh Dhillon said his company is entering the festive season with steady momentum and a positive outlook.He expects consumer confidence to grow post-GST clarification, driving demand across their product range, especially SUVs. Meanwhile, Mercedes-Benz India MD & CEO Santosh Iyer said they will launch an integrated campaign next week to address customer aspirations during this highly anticipated festive season.
Future predictions
ICRA predicts mid-single digit growth for luxury car segment
ICRA Senior VP & Group Head, Corporate Ratings Jitin Makkar, said this year's festive season sales are likely to grow only in the mid-single digits. He attributed this to trade headwinds from high US tariffs impacting business sentiment. Between FY22-FY25, the luxury car segment outperformed the broader passenger vehicle market due to strong aspirational demand across demographics, including younger first-time buyers. However, Makkar predicts a reversal of this trend in FY26 with a potential GST rate cut on smaller cars.