Luxury carmakers press for GST clarity to drive festive season sales

Luxury car manufacturers are urging the government to provide clarity on Goods and Services Tax (GST) rates ahead of the crucial festive season, warning that ambiguity is already causing hesitation among buyers and slowing momentum in the premium auto segment.

The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, is scheduled to meet on 3–4 September to deliberate on moving to a two-slab tax structure. Industry players believe that an early decision will help restore confidence in the market, particularly during the ongoing quarter, which traditionally benefits from higher sales owing to festive demand.

In an interaction with PTI, Hardeep Singh Brar, President and CEO of BMW Group India, said speculation around possible changes to GST rates has unsettled prospective customers.

Brar noted that the interest and demand is strong, but people do have adopted a wait-and-watch approach. This delay in decision-making usually impacts new vehicle sales. He mentioned that expediting clarity on GST rates is essential to get back to speed and make sure that the auto sector’s contribution to economic growth of the country during this quarter is strong.

Brar also underlined the importance of continuing policy support for electric vehicles (EVs). He urged the government to maintain the existing 5 per cent GST on all passenger EVs, warning that any adverse change could derail India’s ambitions for high EV adoption and localised production. BMW, he said, is preparing to launch several new model trims to capitalise on festive demand.

Audi India, meanwhile, expressed cautious optimism. Its Head, Balbir Singh Dhillon, said the company is entering the season with “steady momentum and a positive outlook.”

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Dhillon told PTI that after GST clarification that is expected in the first week of September, they anticipate a rise a rise in demand across as well as consumer confidence in product range—particularly SUVs. With a refreshed portfolio and continued customer engagement, Audi expects sustained growth through the festival period, he added.

Mercedes-Benz India is also betting on the seasonal upswing. Its Managing Director and CEO, Santosh Iyer, described the festive months as “highly anticipated by customers” and said the company will launch an integrated campaign next week to tap into customer aspirations.

Iyer remarked to expect this festive season to bring in a push and drive sales as this is the right time, because of positive customer sentiment and a new portfolio on offer.lu

Read More: Mercedes-Benz India records sales of 4238 units, driven by Core and Top-End luxury vehicles

Despite optimism from luxury automakers, analysts expect only modest gains. Jitin Makkar, Senior Vice President and Group Head, Corporate Ratings at Icra, said luxury car sales during this festive season are likely to grow only in the “mid-single digits.”

He cited external pressures, including high US tariffs, which are dampening overall business sentiment. He observed that a potential GST rate cut on smaller cars could add to the demand in the mass-market segment, while the luxury segment may face a more subdued environment.

So far in the first half of calendar year 2025, luxury car sales have shown only lukewarm growth, weighed down by geopolitical tensions and stock market volatility.

The festive season, which typically kicks off with Onam and culminates with Diwali, has historically been a key driver of sales for automakers. This year, industry leaders are hoping regulatory clarity will be the spark needed to reignite momentum in India’s luxury car market.

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