Sales are suffering as a result of prospective clients adopting a wait-and-watch attitude due to the ongoing uncertainty, industry officials said.
Indian luxury automakers have demanded prompt clarification on the new GST rates, arguing that it is essential to maintaining the auto industry’s momentum over the approaching holiday season.
GST Clarity Crucial for Automakers
Finance Minister Nirmala Sitharaman’s GST Council will meet on 3 September to 4 September 2025.
The agenda includes discussions on the shift to a two slab income tax structure in India
The president and CEO of BMW Group India, Hardeep Singh Brar, told PTI that while consumer demand and interest are high, uncertainties around GST rates have caused buyers to put off making purchases.
To guarantee that the automotive industry makes a significant contribution to economic development this quarter, expediting clarification is crucial. “An bad effect from GST rates may undermine the goal of high EV adoption and local manufacture in India,” Brar said, highlighting the need of maintaining the current 5% GST on passenger electric cars.
Luxury Carmakers Eye Festive Boost
Balbir Singh Dhillon, head of Audi India, said that the luxury automaker is looking forward to the holiday season. “We anticipate that customer confidence will rise and demand will rise throughout our product range, especially for SUVs, after the GST clarification anticipated in early September,” he said.
Santosh Iyer, MD & CEO of Mercedes-Benz India, said, “We expect this Christmas season to give momentum and improve sales, thanks to good consumer mood and a revised portfolio,” referring to the company’s planned integrated campaign.
Analysts warn that the luxury market may continue to develop slowly, nevertheless. “The only expectation for holiday season sales is mid-single digit increase,” said Jitin Makkar, Senior Vice President of Icra.
Geopolitical unrest and high US tariffs are still depressing corporate confidence. A possible GST reduction on smaller automobiles could increase demand in the mainstream market, but the luxury sector is probably going to see a muted climate.
Due to aspirational demand from younger and first-time customers, luxury automobiles have grown at a faster rate than the overall passenger vehicle market between FY22 and FY25.
However, weak sales in the first half of CY2025 as a result of market turbulence suggest that, even with the boosts from the holiday season, total yearly growth may be low.