GST Impact: Two-Wheeler Sales Surge in August 2025 While Passenger Vehicles Face Slowdown

The Indian automobile industry witnessed a mixed performance in August 2025. While the passenger vehicle (PV) segment struggled due to muted demand, the two-wheeler industry posted stable growth. Seasonal festivals such as Onam, Rakshabandhan, and Ganesh Chaturthi provided some retail boost, but dispatches remained cautious amid uncertainty over a possible GST reduction.

Dealers Hold Back Amid GST Confusion

Traditionally, automobile companies push more inventory into the market ahead of the festive season. However, this year the sentiment was different. Anticipation of a GST rate cut prompted both customers and dealers to adopt a wait-and-watch approach.

Currently, two-wheelers and small cars attract 28% GST, while bigger vehicles are taxed at 43–50%. With expectations of price reductions post-GST revision, many buyers delayed purchases. Dealers, too, avoided taking excess stock to minimize risks.

Two-Wheelers Remain on Growth Track

Unlike passenger cars, the two-wheeler segment maintained healthy growth momentum on a yearly basis. Seasonal demand and upcoming festivals like Navratri and Durga Puja are expected to strengthen sales further. Experts suggest that while two-wheelers are stable, four-wheelers may see a 5–10% demand spike if GST is cut.

• Hero MotoCorp reported sales of 5,01,523 units in August 2025, marking a 4.87% rise compared to 4,78,215 units a year ago.

• The scooter segment also showed robust growth, with 52,204 units sold, a 52.89% jump from last year’s 34,145 units.

• TVS Motor Company strengthened its position in the EV space, selling 25,138 electric vehicles in August 2025, slightly higher than 24,779 units in August 2024.

Passenger Vehicles Struggle Despite SUV Demand

The SUV segment continues to dominate the Indian car market, accounting for 65–66% of total PV sales. However, overall deliveries from the top four automakers in August were down 7% year-on-year, standing at 3.3 lakh units compared to 3.5 lakh units in August 2024.

• Maruti Suzuki revealed it has pending orders of 1.5 lakh units, with dealer networks carrying nearly 50 days of stock.

• Sales of mini cars fell by 36%, while compact cars registered only marginal growth.

• Even the SUV category slipped 14%, highlighting subdued consumer sentiment.

Outlook Ahead

Industry experts believe that the upcoming festive season, combined with a possible GST rate revision, could alter buying behavior significantly. If tax cuts are implemented, the PV segment is expected to benefit the most, while two-wheelers and EVs may continue their steady growth trajectory.

The data from August clearly shows a diverging trend—with two-wheeler manufacturers enjoying momentum, while passenger vehicle makers wait for a policy push to revive demand.