August Auto Sales Preview: Pre-GST Rate Cut Slowdown Creeps In As Car Buyers Remain On Sidelines

The month of August is a key one for auto companies as we see onset of festivals like 'Ganeshotsav' as well as inventory being filled across the sector. This time though, the second half of the month left everyone on uncertain ground.

PM Narendra Modi in his speech on August 15 highlighted he wants to bring "next-generation" GST reforms that will reduce the tax burden across the country. Largely automobiles are set to see a reduction in GST rate from 28% to 18% and this will drive significant savings for the buyers.

But what this news has done is stop the buyers from purchasing vehicles before the official announcement. Hence, sales have been impacted especially in the second half of the month. The GST group of ministers' (GoM) meet is scheduled on September 3 and 4 and could approve immediate implantation of reduced GST rates.

Brokerages expect sales of cars to have flat to low single-digit growth while tractors will continue positive momentum. Two-wheelers will be in focus as they are expected to see a huge benefit, especially the 100-cc entry level motor vehicles, but due to delayed purchases Hero and Bajaj may see subdued numbers.

Two-wheelers continue to lead the gains and with the potential GST rate cut the subdued entry level segment will get a major boost. The story of the past few months for two wheelers has been premiumisation and export led growth. This has led to growth for players like Eicher and TVS.

For Eicher specifically, this month is expected to show a stellar 44% growth in sales. This is the first time the company likely sold over 1 lakh two wheelers in a month and that’s roughly 11% of the annual sales.

TVS continues its growth momentum with multiple levers firing for the company. The scooter segment both ICE and Electric continue to show growth while export market growth continues.

Barring Mahindra and Mahindra, the growth has been subdued for passenger car makers and now with a potential GST rate cut just a few days away, buyers have stayed away despite the festive season. This has also led to the high-flying M&M to pull back some stock to avoid excess inventory, according to a story by NDTV Profit.

But given the multiple new launches including Harrier EV, Maruti’s new EV, Creta EV, amongst others, that are expected and yet to come like the Tata Motors Sierra and Maruti's new ICE SUV, growth should be better compared to the flat to low single-digit growth in first half of FY26.

Truck makers have had a decent month despite the monsoons. Low to mid-single-digit growth is penciled in the month of August. For Ashok Leyland, growth has been 3% for FY26 while Tata Motors has seen a fall in sales. Volvo Eicher CV, the commercial vehicle arm of Eicher Motors has shown the highest growth of 9% for FY26 till date.

Bus segment showed the highest alpha growth last year and that trend played out between April and July as well.

While Ashok Leyland’s overall growth has been at 3%, bus segment is up 19% year-to-date.

Farmer sentiment is positive in anticipation of a surplus rainfall season and that has led to growth for tractors. Escorts is seen having decent growth led by new product launches and better growth in Northern belt. For the year, M&M has been outperforming its closest peer with almost 10% growth in FY26 vs 1% growth for Escorts – a trend that has followed through from the last fiscal year.