Car dealerships experienced a dip in sales during the celebrations of Ganesh Chaturthi and Onam.

In a significant move for the Indian automobile industry, the GST Council has slashed GST rates and removed cess on vehicles up to 4 metres in length and 1200 cc engine capacity, effective from September 6, 2025. This decision has resulted in a reduction of vehicle prices for several automobile brands, including Tata Motors, Mahindra & Mahindra, BMW India, Suzuki, and Kia.

The reduction in GST rates and removal of cess have made vehicles cheaper, as announced by these Indian automakers. Tata Motors, for instance, has reduced vehicle prices ranging from ₹65,000 to ₹1,55,000, while Mahindra & Mahindra has announced a price reduction between ₹1,01,000 and ₹1,45,000. BMW India has reduced vehicle prices ranging between ₹2,00,000 and ₹9,00,000. Suzuki and Kia also followed suit, lowering their vehicle prices on September 6, 2025.

However, the festive season start has seen a significant year-on-year decline in sales, affecting automobile dealers across the country. The subdued sales during Ganesh Chaturthi and Onam, if they continue till September 22, will not be beneficial for automobile dealers or the industry.

The delay in sales is due to consumers anticipating a reduction in GST on vehicles. Consumers delayed purchases during these festivals, hoping for lower prices. Enquiries and footfall in showrooms increased after the announcement of the potential GST reduction on small cars and motorcycles, but purchases were delayed.

The loss of cess could wipe out profit for the entire year for dealers operating on minimal margin. The removal of cess in GST reforms is expected to cause an estimated ₹2,500 crore loss for automobile dealers, according to a dealers association. The Centre has not intervened on this potential loss, as stated by the Federation of Automobile Dealers Associations (FADA).

FADA is hoping for interim relief for dealers and will be meeting key ministers in the coming week to discuss the cess loss and its impact. The dealers association has expressed concern over the unfair burden of the cess loss on dealers, who are already struggling due to subdued sales in the first half of the year, caused by extreme weather conditions, and now further delayed sales in the festive period.

The cess loss is expected to severely impact automobile dealers, as inventories for some automobile brands have risen to up to 90 days due to delayed sales. According to FADA, passenger vehicle inventories are between 50-55 days, while some dealers claim inventories are double that amount.

In conclusion, the GST rate reduction and cess removal have brought down vehicle prices in India, but the delay in sales during the festive season has caused concern among automobile dealers. FADA is seeking interim relief and will be meeting with key ministers to discuss the cess loss and its impact on the industry. The publication date of this article is September 6, 2025.

Car dealerships experienced a dip in sales during the celebrations of Ganesh Chaturthi and Onam.