With the implementation of new Goods and Services Tax (GST) rates on Monday, car showrooms in Chennai are passing on the benefits to consumers, boosting sales during the festive season.
At Maruti car showrooms, customers are availing themselves of the tax reduction, with around 2,000 cars already booked in September following the slab rationalisation. “In the past month, more than 2,000 bookings have been taken because of GST rate cut. Today is where the new prices have come in,” said showroom manager Sivaraj.
He added that the minimum price of a car has dropped from Rs 4.5 lakh to Rs 3.4 lakh, with special offers introduced for Diwali. Sivaraj also noted that some buyers are now opting for cars instead of two-wheelers due to the price advantage. “Within Rs 4.5 lakh we can buy a car. For example, a two-wheeler may cost around Rs 2 lakh, but with the GST reduction, spending an additional Rs 2 lakh to buy a car is more feasible,” he explained.
The GST rationalisation, reducing rates from 28% to 18% for small cars, two-wheelers up to 350cc, and auto parts, and from 45% to 40% for higher segments, is expected to spur demand across the automobile sector. Buses, trucks, and three-wheelers have also benefited from the rate cut.
Motilal Oswal’s report highlighted that the tax reduction is likely to drive a demand revival, gradually reducing discounts across categories and supporting margin expansion for automakers. The report also noted that small car demand is expected to grow from a low base, contributing to the overall market recovery.
“Right now the government has introduced big changes for the automobile industry. This will have a major impact on car sales in the current scenario. We hold around 53% of the market share, selling more than 1.5 lakh cars month on month,” Sivaraj added.
The move comes as part of the nationwide GST Bachat Utsav, aimed at passing on tax savings to consumers while boosting consumption during the festive period.
