Jefferies expects demand restoration pushed by tax reduction, higher liquidity, and GST cuts, with the 2W and small PV segments benefiting most.
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The auto trade is more likely to get a big increase as the federal government is anticipated to announce Items and Providers Tax (GST) fee cuts quickly.
In accordance with a report by Jefferies, the outlook for the two-wheeler (2W) and passenger car (PV) industries has been revised upward, with volumes for FY25-28E elevated.
It said, “We elevate FY26-28E 2W and PV trade volumes by 2-6 per cent. We count on 2Ws to develop at a quicker 10 per cent CAGR over FY25-28E vs 8 per cent for PVs.
“The report highlighted that volumes within the 2W phase are anticipated to develop at a quicker tempo of 10 per cent CAGR over FY25-28E, in comparison with 8 per cent CAGR for PVs.
Registrations subdued, tractors buck pattern
The quicker progress projection for 2Ws comes on the again of a benign base, as FY25 volumes are nonetheless 6 per cent beneath the pre-Covid peak of FY19.Jefferies famous that demand for vehicles has been subdued previously few months. Between April and July, registrations grew simply 2-3 per cent year-on-year for each 2Ws and PVs, whereas truck registrations really fell 3 per cent year-on-year.
The tractor phase, nonetheless, bucked the pattern, reporting a stronger 7 per cent year-on-year progress.
The report identified that demand is anticipated to select up within the coming months because of a mix of things, together with the latest earnings tax minimize, easing liquidity available in the market, and the potential discount in GST charges.
It maintained its earlier estimates for FY25-28E quantity progress at 9 per cent for tractors and three per cent for vans.
2Ws, small PVs seemingly greatest beneficiaries
Among the many segments, Jefferies believes that 2Ws and small PVs (sub-4 metre automobiles and SUVs), that are at the moment taxed at 28-31 per cent, are more likely to profit essentially the most from the potential GST minimize.
Massive SUVs, presently taxed at 45-50 per cent (28 per cent GST plus cess), might additionally see their charges drop to round 40 per cent.
The report added that tractors might see their GST fee decreased from 12 per cent to five per cent, though this may increasingly create an inverted responsibility construction, as most metals and elements appeal to an 18 per cent GST.
Industrial autos, too, may gain advantage, with a potential discount from 28 per cent to 18 per cent.
Truck demand tied to freight, not costs
Nonetheless, Jefferies underlined that freight demand is anticipated to play a bigger function in driving truck purchases than decrease car costs.
In accordance with the report, a 7-10 per cent GST fee minimize might end in a 6-8 per cent discount in on-road costs for many autos, offering reduction to customers and probably lifting demand throughout segments.
Revealed on September 1, 2025
