Quote on the impact of GST Rate cut on the Auto Sector by Arun Agarwal, VP Fundamental Research, Kotak Securities
Below the Quote on the impact of GST Rate cut on the Auto Sector by Arun Agarwal, VP Fundamental Research, Kotak Securities
The GST council has approved and reduced GST rates across automobile segments, except for more than 350 cc two-wheeler segment (GST rate has increased for above 350 cc). For Electric Vehicles , GST rates remain unchanged at 5%. Assuming a full pass-through, the on-road price reduction for two-wheelers (<350 cc), three-wheeler, commercial vehicle and tractors could be in the range of mid-to high single digit. For the passenger vehicle segment, the on-road price reduction may be low-to-high single digit, depending on models.
Lower prices would likely stimulate demand recovery across segments, and the impact is expected to be more in the mass-market categories. Auto components players having higher domestic exposure will benefit from stronger OEM demand. Export dependent players will likely see limited benefits
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