Tata Motors, Maruti, Bajaj Auto, Hero Moto, Hyundai: GST cuts & festive season outlook

Auto stocks such as Tata Motors, Maruti Suzuki India, Bajaj Auto, Hero MotoCorp, Hyundai Motor India and Eicher Motors are in focus on Monday morning as GST cuts kicked off. The GST cut news had sparked a wave of inquiries and showroom visits, though actual purchases remained on hold, according to channel checks by Nirmal Bang Institutional Equities.

"September is expected to be a two-phase month with a muted first half impacted by Shraddh period and customer postponement, followed by a sharp surge in sales supported by model price cuts (lower GST slabs), pent-up demand, and festive sentiment," the brokerage said.

Factors such as the GST cut, favorable agricultural conditions, infrastructure-led rural growth, and softening interest rates are expected to bring demand momentum, even beyond the festive window, Nirmal Bang. The GST benefit is seen broad-based across two-wheelers (less than 350cc), four wheelers, commercial vehicles, and tractors, with entry-level car segments expected to gain the most. Mahindra & Mahindra, Eicher Motors, and ASK Automotive remained the broker's preferred picks.

Dealers across the Mumbai region reported a significant jump in footfalls following the mid-August announcement of tax relief. However, most customers have deferred purchases until the benefits are formally passed on, leading to weaker-than-expected Ganesh Chaturthi sales. Electric vehicle (EV) sales, meanwhile, continued to outperform, sustaining momentum despite the transition.

Inventory pile-up and supply chain disruption
The delay in customer purchases created an inventory build-up, with several dealerships halting fresh orders from OEMs until existing stock is cleared. This has caused supply chain disruptions. A key concern remains the absence of clarity on adjusting cess already paid, which dealers flagged as a major bottleneck in ensuring a smooth transition, Nirmal Bang said.

Passenger vehicles: EVs, SUVs shine
Nirmal Bang said Mahindra dealers reported steady traffic compared to peers, supported by strong interest in the BE 6 and XEV9e EV models, both of which now have waiting periods of three to six months. Maruti Suzuki's new SUV Victoris has seen strong bookings, with deliveries expected in the coming weeks and a waiting period of three to four months. In contrast, Hyundai’s Creta EV has underwhelmed, with sales falling short of expectations.

Two-wheelers: EVs hold ground
Nirmal Bang said two-wheeler showrooms saw higher inquiries around price cuts and discounts, but purchases were postponed as buyers waited for the tax benefits to reflect. Still, EVs bucked the trend: Bajaj’s Chetak registered a pickup in sales after supply-chain normalization, while Hero continued to see robust demand for its Vida V2 and VX2 scooters. However, limited clarity on resale options for the Battery-as-a-Service model restricted broader adoption. TVS and Royal Enfield remained relatively insulated, supported by strong August numbers.

Commercial vehicles: Positive outlook for H2
Sales of commercial vehicles were less affected, particularly among large fleet operators. Dealers expect GST cuts, combined with rising profitability for fleet owners and stronger infrastructure and construction activity, to drive an uptick in volumes in the second half of FY26.

Tractors: Rural boost, with a caveat
Tractor and farm equipment demand also benefited from the GST cuts, with inquiries and advance bookings rising as affordability improved for small and marginal farmers. However, Nirmal Bang cautioned that erratic rainfall in September could weigh on growth in rural markets.

Overall, while the GST cuts have buoyed sentiment and set the stage for stronger festive demand, uncertainties around inventory adjustments and cess reimbursements are creating near-term challenges for the dealer network.