New GST Rates Boost Auto Stocks: Tata, Hyundai, Mahindra & Kia Pass on Major Price Cuts

Since Prime Minister Narendra Modi’s Independence Day announcement and the rollout of GST 2.0 reforms, the auto sector has been in the spotlight. 

The GST 2.0 reforms, with rates of 18% for small cars and two-wheelers and 40% for luxury cars and large SUVs (up from 28% plus cess), have boosted investor sentiment and triggered significant shifts for manufacturers, dealers, and consumers. The Nifty Auto index reflects this momentum, clearly outperforming the broader market in recent weeks.

Let’s dive into how the sector has performed, what industry bodies are saying, how leading automakers are responding, and the benefits reaching customers.

Nifty Auto vs Nifty 50: Clear Outperformance

• The auto sector has clearly taken the lead since the PM’s 15th August announcement, with Nifty Auto gaining 7.85% during this period.
• Following the official GST 2.0 rollout, the Nifty Auto index climbed another 5.8%, while the broader Nifty 50 managed a modest 1% rise over the same timeframe.

Investors are clearly backing the auto sector; the figures clearly show the auto index is not just outperforming, it’s leading the market momentum.

Industry Bodies Welcome the Move

SIAM (Society of Indian Automobile Manufacturers)

SIAM welcomed the GST cut, calling it a relief for consumers and a boost for demand, particularly for first-time buyers and middle-income families. It also praised the continuation of the 5% GST rate on EVs, terming it supportive of sustainable mobility.

FADA (Federation of Automobile Dealers Associations)

FADA acknowledged the reforms as positive for affordability and demand but flagged the need for clear guidelines on the treatment of compensation cess credits to safeguard dealer interests during the transition.

Carmakers Announce Price Reductions

India’s leading automakers have quickly embraced GST 2.0, announcing across-the-board price reductions to pass on the benefits directly to customers, effective from 22nd September 2025. 

Tata Motors

• Tata Motors confirmed it will pass on the full GST benefit, calling the move “progressive and timely.” 
• Prices now drop between ₹65,000 and ₹1.55 lakh, led by popular SUVs like the Nexon, Safari, and Harrier, while entry models such as the Tiago and Punch see reductions up to ₹85,000.

Hyundai Motor India

• Hyundai hailed the reform as ‘far-sighted.’ Price cuts span ₹60,640 to ₹2.4 lakh, with the Tucson leading the pack with a benefit of ₹2.4 lakh.
• Best-sellers also see meaningful relief, with the Venue benefiting from a price cut of ₹1.24 lakh and the i20 seeing a reduction of ₹98,053, ensuring affordability across both mass and premium segments.

Mahindra & Mahindra

• Mahindra, India’s top SUV maker, passed on full benefits, framing it as a move toward transparency. 
• Reductions across Mahindra’s SUVs range from ₹1.01 lakh to ₹1.56 lakh, with the biggest savings on the XUV3XO Diesel (GST from 31% to 18% now) resulting in a price benefit of up to ₹1.56 lakh.
• Volume drivers like the Scorpio-N and XUV700, both seeing a GST rate cut from 48% to 40%, also benefit from significant price reductions of ₹1.45 lakh and ₹1.43 lakh, respectively, making these popular SUVs more accessible.

Kia India

• Kia India rolled out sharp price revisions across its ICE lineup, describing the reform as “visionary” and “citizen-centric.” 
• Savings range from ₹48,000 to ₹4.48 lakh, led by the Carnival at the premium end. Price cuts make popular models more accessible ahead of the festive rush, with reductions of up to ₹1.64 lakh on the Sonet, ₹1.86 lakh on the Syros, and ₹75,372 on the Seltos.

Benefits to Automakers and Consumers

For Automakers

• Boosted Demand: With the festive season demand on the horizon, all major players expect a surge in bookings and deliveries due to price reductions, positioning themselves more competitively.
• Revenue Growth: Lower prices and increased sales volumes are expected to improve revenue visibility for automakers while supporting stronger overall financial performance during the high-demand period.
• Market Competitiveness: Automakers see GST 2.0 as a step that enhances competitiveness and growth potential, describing the reform as “progressive” and “customer-first.”

For Consumers

• Immediate Price Cuts: Leading automakers are passing on the full benefit of GST 2.0 to buyers, with reductions up to ₹2.4 lakh on the Hyundai Tucson, ₹1.55 lakh on the Tata Nexon, and ₹1.56 lakh on the Mahindra XUV3XO Diesel, making new cars significantly more affordable.
• Greater Access: By lowering the upfront cost, these price cuts bring personal and commercial vehicles within reach of a wider range of customers, particularly first-time buyers and middle-income families.
• Lower Total Cost of Ownership: Commercial buyers, like taxi operators and delivery companies, save on upfront costs and running expenses due to GST price cuts. Some of these savings may be passed on to end consumers through lower fares or cheaper deliveries.

Conclusion

The GST 2.0 reforms have created a win-win scenario across India’s auto sector. Automakers benefit from improved revenue visibility, stronger demand, and enhanced competitiveness, while industry bodies see long-term growth potential supported by a more structured tax regime. Consumers gain from lower prices, greater access to vehicles, and reduced running costs, making ownership more affordable. 

The auto sector is positioned to lead the market, maintaining momentum and setting the pace for growth in the months ahead.

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