The automobile sector witnessed strong traction on September 4, 2025, after the Goods and Services Tax (GST) Council announced a major rate reduction across vehicle categories. The move, effective from September 22, 2025, is being seen as a major relief for buyers ahead of the festive season, making cars, two-wheelers, and commercial vehicles significantly more affordable.
GST Rate Cuts for Automobiles
The Council lowered GST on multiple automobile segments, bringing them down from 28% to 18%:
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Petrol and petrol-hybrid cars (up to 1200cc/4000mm)
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Diesel and diesel-hybrid cars (up to 1500cc/4000mm)
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Three-wheelers
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Motorcycles (350cc and below)
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Goods transport vehicles
This sharp reduction in taxes is expected to improve demand in both urban and rural markets, while also giving automobile manufacturers a boost in sales volumes.
Stock Market Reaction
Automobile stocks reacted positively to the announcement. While some counters saw heavy buying, others witnessed mild profit booking.
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Escorts Kubota surged over 8%, emerging as one of the top gainers in the sector.
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Mahindra & Mahindra (M&M) jumped more than 6% on expectations of higher tractor and SUV sales.
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Eicher Motors climbed nearly 3%, while Hero MotoCorp, TVS Motors, Hyundai Motor India, and Tata Motors posted moderate gains in the range of 1–1.5%.
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Maruti Suzuki, the country’s largest carmaker, edged up close to 1%.
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On the other hand, Landmark Cars, Force Motors, and Ola Electric Mobility slipped into the red despite the upbeat sector sentiment.
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