Goldman Sachs said India’s auto sector has witnessed a sharp rebound in volumes following the recent GST cut, with two-wheeler and passenger car volumes up around 25% and 23%, respectively, compared with a like-for-like period last year. Adjusting for deferred demand in passenger vehicles, the brokerage noted that two-wheelers have still grown 18–21% year-on-year since the tax cut, reflecting a broad-based recovery in demand.
However, Goldman Sachs cautioned that this pace of growth may not sustain indefinitely. The brokerage expects Q4FY26 volume growth in both two-wheelers and cars to moderate slightly, as base effects normalise and pent-up demand is gradually absorbed. In the commercial vehicle space, volume growth is likely to soften towards mid-single digits by the March 2026 quarter.
The brokerage highlighted that cars continue to outperform two-wheelers, with December car volumes up 27% YoY, compared with 13% growth in two-wheelers. This divergence reflects stronger urban demand and higher replacement activity in passenger vehicles.
Overall, Goldman Sachs views the GST-led boost as a meaningful positive for the sector, but believes investors should be mindful of growth normalisation over the next few quarters, particularly as macro conditions and affordability dynamics evolve.
Disclaimer: The views and recommendations above are those of Goldman Sachs. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
