Luxury carmakers urge clarity on GST rates to boost festive season sales

A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.

The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.

In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.

Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted.

"Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.

He also hoped that the sustainable push towards electric cars will continue to be encouraged as a priority and will reflect in the GST strategy by retaining the existing 5 per cent GST on all passenger electric vehicles.

An adverse impact from GST rates can derail the vision of high electric adoption and local production in India, he added.

Brar noted that the company is geared to introduce several model trims during the festival season.

Audi India Head Balbir Singh Dhillon stated that the luxury carmaker is entering the festive season with steady momentum and a positive outlook.

"Post the GST clarification expected in the first week of September, we expect consumer confidence to grow and demand to increase across our product range -- ?particularly for our SUVs, which continue to attract customers," he noted.

With an exciting product portfolio and strong customer engagement, the automaker is confident of sustained growth throughout this festival period, Dhillon said.

Mercedes-Benz India MD & CEO Santosh Iyer said the festive seasonality is highly anticipated by customers and the company will roll out an integrated campaign next week, addressing customers' aspirations.

"We expect this festive season to bring in impetus and drive sales as this is the right time, owing to positive customer sentiment and a refreshing new portfolio on offer," he added.

Commenting on the overall business scenario in the luxury car segment, Icra Senior Vice President & Group Head, Corporate Ratings Jitin Makkar said the sales during the festive season this year is expected to grow only in the mid-single digits, as trade headwinds emanating from the impact of high US tariffs are likely to dampen business sentiment.

Between FY22 and FY25, the luxury car segment outpaced the broader passenger vehicle market, driven by strong aspirational demand across diverse demographics, including younger and first-time buyers, he added.

"However, this trend is poised to reverse in FY26. A potential GST rate cut on smaller cars could stimulate demand in the mass-market segment, while the luxury segment may face a more subdued environment," Makkar said.

Already, in the first half of CY2025, growth in luxury car sales has been tepid, weighed down by geopolitical tensions and stock market volatility, he said.

"Although festive season buying may lift volumes sequentially, overall growth for the full year is likely to remain muted," he added.

The festive season usually commences with Onam and ends with Diwali every year.