Simplified GST Could Drive Small Car, Two-Wheeler Boom, Says SEBI Analyst

The analyst flagged GST reforms as a key driver for auto sector growth.

Shares of auto majors, including Hero MotoCorp, Maruti Suzuki India, Ashok Leyland, TVS Motor, and Bajaj Auto, rallied between 5% to 8% on Monday, driven by talks of major GST reforms. 

The proposed GST changes aim to simplify taxes, reduce costs, and make small cars and two-wheelers more affordable, which could boost sales, support manufacturers, and strengthen the overall industry, according to SEBI-registered analyst Mayank Singh Chandel. 

GST Bonanza For Indian Auto Companies?

Reports suggest that a simplified two-tier GST system is on the cards. Rates may be set at 5% and 18% for most vehicles, and 40% for luxury cars. Chandel said that this clearer tax framework is designed to make planning easier for manufacturers and minimize confusion regarding vehicle pricing.

GST 2.0 Buzz: How Auto Companies Benefit?

Lower prices would translate into higher sales as they attract more buyers, he observed. Additionally, this reduction in cost would lead to improved profits and margins for the auto industry. 

Logistic operations may also become more efficient due to the simplified GST regime, resulting in lower transport and supply chain costs, Chandel flagged. And these changes would lead to a rise in investor confidence in the auto sector at large.

He concluded that the GST reforms are good news for auto stocks, making companies like Hero MotoCorp, Maruti Suzuki, Ashok Leyland, TVS Motor, and Bajaj Auto attractive for investors looking for growth in the sector. 

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