India delivers a festive bonanza for automakers with GST rate cuts
Here's a detailed breakdown of how prices are going to be affected
With the central government restructuring the tax slabs, the automotive industry has gotten momentary relief after a year defined by geopolitical headwinds. However, for two-wheeler manufacturers, especially those making premium, mid-size motorcycles (Bajaj, Triumph, Royal Enfield etc) , the reforms mean higher prices While the chief beneficiaries of this scheme will be makers and consumers of small, entry-level cars, there is a marginal price reduction on luxury cars as well. With the new tax slabs coming into effect on September 22, here’s how the old and the new hold-up against each other.
Under the new GST regime, cars with a cubic capacity upto and below 1200cc, with length up to and under 4 metres, will now attract a GST of 18% instead of the previous 28%. This means that cars like the Alto K10, the Tata Tiago, the Suzuki Wagon R, Swift etc will now see a price reduction anywhere between ₹47,000 - ₹68,000 (for the Alto), ₹64,000- ₹84,000 for the WagonR and upto ₹1.38 lakh for more premium offerings like the Hyundai i20N Line.
Even cars with cubic capacity upto and above 1500cc are going to get cheaper. The Maruti Suzuki Brezza, for instance, with a 1.5-litre naturally-aspirated engine, will now attract a flat 40% GST as opposed to the previous 45% (28% GST + 17% cess) with an estimated ₹30-40,000 price reduction. Meanwhile models like the Tata Nexon have a considerable edge over the Brezza now, given that its 1.2-litre engine and sub-4 metre length qualify it for an 18% GST bracket, effectively reducing its estimated price by ₹68,000- ₹1.26 for the top-end variant.
No country for premium two-wheelers
{{/usCountry}}No country for premium two-wheelers
{{/usCountry}}Brand heads like Rajiv Bajaj and Eicher Motors MD Siddhartha Lal have been vocal in their opposition to the revised GST slabs for motorcycles above 350cc. Under the new regime, all motorcycles above 350cc will now attract a flat GST rate of 40%. For Royal Enfield these include many of their new crop of motorcycles including the Himalayan 450, the Scram 400 and the Bear 650 while Bajaj’s 373cc Pulsar, Dominar and Triumph’s 400cc Speed T4 built-in collaboration with Bajaj will see price hikes between ₹18000 - ₹30,000 depending on the individual prices of the motorcycles.
{{/usCountry}}Brand heads like Rajiv Bajaj and Eicher Motors MD Siddhartha Lal have been vocal in their opposition to the revised GST slabs for motorcycles above 350cc. Under the new regime, all motorcycles above 350cc will now attract a flat GST rate of 40%. For Royal Enfield these include many of their new crop of motorcycles including the Himalayan 450, the Scram 400 and the Bear 650 while Bajaj’s 373cc Pulsar, Dominar and Triumph’s 400cc Speed T4 built-in collaboration with Bajaj will see price hikes between ₹18000 - ₹30,000 depending on the individual prices of the motorcycles.
{{/usCountry}}For motorcycles and scooters under 350cc, the revised tax from 28% to 18% slab will see estimated price cuts ranging from ₹6580 - ₹12,861.
What does this mean for hybrids?
For the first time, the government has offered a GST rebate on hybrids, albeit those which are under 4 metres with a petrol engine up to 1200cc or a diesel engine up to 1500cc. While this may seem like the kind of impetus mass market manufacturers need to produce small, low-cost strong hybrids, experts believe that it is unlikely to get said manufacturers to invest heavily in small hybrids, even though the distinction between strong hybrid and mild hybrid appears to have been removed under the new tax regime.
According to the founder and former Chairman of the Federation of Automobile Dealers Association Vinkesh Gulati, it is unlikely to cause any revision in overall strategy. “As of now, all small cars are now in the 18% GST bracket, so what’s the fun in investing more in hybrid? A customer buys a hybrid because the average is good. If I give him a hybrid at ₹14 lakh, offering a 15% better average, would the customer pay ₹2-3 lakh more? I don’t think so” says Gulati, who also owns a Mahindra dealership. “The number of people enquiring about hybrids in this segment is relatively low”
