Almost every passenger vehicle OEM in India has announced a price hike of its vehicles between three and five percent starting January 2025. Even some commercial vehicle manufacturers have announced that they will hike the prices of their vehicles starting January 2025 owing to the increase in input costs, rise in operational expenses and inflation. 
While the annual inflation rate in India eased to 5.48 percent in November of 2024 from 6.21 percent in the previous month loosely in line with market expectations of 5.5 percent, according to a report by tradingeconomics.com, the increase in automobile prices by three to five percent is expected to dampen the market sentiment at least for the short term. 
If the spike in auto sales during the festive season provided a reason to cheer, the first half of the current fiscal saw many segments registering a slowdown in sales. The extent of this was also indicated by the automotive dealers’ body, the Federation Of Automotive Dealers Association rising in favour of its dealer members to urge automakers to adjust their production schedule in the wake of the inventory at dealers reaching an alarming level. 
The festive season helped to lower the inventory build up of vehicles to a certain extent. However, with the last quarter of this fiscal expected to be a sluggish period for auto sales as it traditionally is considered to be, the news of hike in GST on old and used vehicles from 12 percent to 18 percent is likely to cause some shake up in the used vehicle market that has seen better times in the recent few months as more and more aspiring motorists turn to used cars because of budget constraints and other factors. 
Despite the higher interest rate of above 13.5 percent in case of used vehicles as compared to the interest rate of between eight to 10 percent for new vehicles, the pull for them has been high in the recent times. This is likely to be affected if and when the GST Council’s fitment committee clears the proposal to change the GST on old and new vehicles with an engine capacity of no bigger than 1,200 cc and length of no more than four metre as mentioned above. Even electric vehicles that attract a GST of five percent when bought new will see the GST on them hiked to 18 percent from 12 percent if the proposal goes through. 
While the logic that the hike in GST on used and old vehicles will increase the sale of new small vehicles is hard to understand when applied against the fact that an entry-level vehicle like the Maruti Alto K10 today looks cost to buy at a price of INR 470,000 on-road Mumbai for the basic trim. Also, the sales of it have been steadily shrinking with a trend visible of a rising demand for SUVs. 
Even an entry-level SUV with Maruti S-Presso costs INR 499,000 on-road in Mumbai for the basic trim. The ones like Hyundai Exter or Renault Kiger costs INR 721,000 and INR 705,000 on-road in Mumbai for basic trim variant. 
With prices of vehicles in India claimed to have gone ‘over the roof’, not counting the hike in January 2025, a proposal to hike the GST on luxury automobiles to 35 percent is said to be under consideration. 
Against such a background it would be worth understanding the taxt structure on automobiles in the country to anticipate what an increase from 28 percent GST to 35 percent GST would entail. Passenger Vehicles (Petrol, CNG, LPG) measuring no longer than four metre in length and having an engine of no more than 1,200 cc are taxed at 28 percent. With a compensation cess of one percent, the total tax rate applied in 29 percent. 
Passenger vehicles (diesel) measuring no more than four metre in length and having an engine of no more than 1,200 cc are taxed at 28 percent. With a compensation cess of three percent, the applied rate is 31 percent. Passenger vehicles with an engine of no more than 1,500 cc are taxed at 28 percent. With compensation cess of 17 percent, the applied rate is 45 percent. 
Passenger vehicles with an engine of more than 1,500 cc are taxed at 28 percent. With compensation cess, the applied rate is 48 percent. SUVs that measure above four metre in length, having an engine of more than 1,500 cc and a ground clearance of more than 170 mm are taxed at 28 percent. With compensation cess of 22 percent, the applied rate is 50 percent. 
Hybrid vehicles measuring up to four metre and having an engine of no more than 1,200 cc are taxed at 28 percent. Hybrid vehicles measuring more than four metre in length and having an engine of more than 1,200 cc (petrol) and 1,500 cc (diesel) are taxed at 28 percent. With compensation cess of 15 percent, the applied rate is 43 percent. 
Public transport vehicles of between 10 and 13 seats are taxed at 28 percent. With compensation cess of 15 percent, the applied rate is 43 percent. In the case of buses above 13 seats and goods transport vehicles, the applier GST rate is 28 percent. 
In the case of two- and three-wheelers the GST is 28 percent. With a compensation cess of three percent on two-wheelers above 350 cc, the applied rate for them is 28 percent. Electric vehicles, on the other hand, attract a GST of five percent. For hydrogen vehicles it is 12 percent. 
Besides GST plus compensation cess, there are other State Government and Union Government taxes such as the road tax, 18 percent GST on insurance (an insurance of three years is applied on some class of vehicles including two-wheelers at the time of purchase), toll tax, tax on fuel etc that effective push the tax percentage for every vehicle bought to a considerably higher level. 
The talk of luxury vehicles – which whether one should assume would be premium two-wheelers above 350 cc; passenger vehicles that measure more than four metre and have an petrol engine of more than 1,200 cc and a diesel engine of more than 1,500 cc, and hybrid vehicles measuring more than four metre in length and having an engine of more than 1,200 cc in petrol and 1,500 cc in diesel – being pushed to the 35 percent GST slab that is under consideration may elevate the tax percentage in the price tag to well above 50 percent. This is without including the other taxes mentioned above. 
An article in the Telegraphindia.com dated 4 December 2024 reports that the proposal of the Group of Ministers (GoM) for 35 percent GST for sin goods that are currently taxed at 28 percent has created uncertainty regarding the taxation of automobiles as well. This is particularly the case because they are taxed on par with sin goods like cigarettes and aerated drinks.
While the GoM is only a recommending body and the GST Council the ‘actual deciding’ organisation, an early clarity on whether automobiles/vehicles will be separated from sin goods as they contribute to people’s mobility and the nation’s supply chain would help it looks like.   
As a slowdown continues based on inflation, rise in input prices and operational expenses, the news of increase in some segments of small old and used vehicles as well as the proposal to elevate GST on sin goods from 28 percent to 35 percent is creating new reason for some sectors to worry about. The effect of such occurrence on the economy and on the market is necessary to consider as automobiles have always been described as luxury goods and taxed on par with sin goods, said an industry observer.
The demand of the auto sector to reduce GST on automobiles has never been entertained, which further emphasises that automobiles – even a commuter scooter or a truck – are considered as luxury goods bordering on sin goods, he added. 
The move to tax a section of the new vehicles such as those with a petrol engine of more than 1,200 cc and a diesel engine with more than 1,500 cc to 35 percent is certain to have a profound effect on the auto industry which is being pushed to become a key manufacturing hub in the world. 
The jump through various regulations has already affected the prices of vehicles across the last decade or two. It has made it hard for some aspiring individuals and families to even afford entry-level passenger vehicles.  
India has 34 cars per 1,000 people whereas key automotive markets that are also the key manufacturing hubs have up to 594 cars per 1,000 people. For India to be a key automotive manufacturing hub like China, the observer said, it must first create a market at home where high quality vehicles are taxed such that a larger section of population can afford them, use them and be truly a part of the economic progress the country is achieving. 
The demand for large cars and congestion in many Indian cities makes a ripe case of small cars, small electric cars being used as city commuting machines over two-wheelers, he added. 
“Excessive taxation on sectors like housing and automobiles should not create a situation where the hen that lay golden eggs was killed to find a treasure trove of gold but what was found was just a lifeless body of her,” he signed off. 
 

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Automotive wholesales for May 2025 showcased a dynamic landscape for the Indian automotive industry, with OEMs experiencing distinct sales trajectories. From significant growth in the two-wheeler segment to some PV makers facing headwinds, the month provided an indicative picture of shifting consumer preferences and market conditions.

Hero MotoCorp, the world's largest manufacturer of motorcycles and scooters, dispatched 507,701 motorcycles and scooters in May 2025, showing both sequential and annual growth. The company maintained strong market momentum with 500,000 VAHAN registrations.

Hero MotoCorp's global retail performance also showed robust momentum, particularly in Bangladesh and Colombia, with exports maintaining a steady trajectory. The electric vehicle brand, VIDA, powered by Hero MotoCorp, delivered growth with dispatches of 8,361 units and 7,161 VAHAN registrations for the VIDA V2 electric scooter range, achieving a 7.2 percent VAHAN market share.

Honda Motorcycle & Scooter India (HMSI) recorded total sales of 465,115 units in May 2025. Domestic sales for HMSI stood at 417,256 units. The company's exports contributed 47,859 units to the total sales figure.

TVS Motor Company demonstrated impressive overall sales growth in May 2025, increasing by 17 percent to 431,275 units from 369,914 units in May 2024. Domestic two-wheeler sales registered growth of 14 percent, increasing from 271,140 units in May 2024 to 309,287 units in May 2025. Motorcycle sales saw a 22 percent increase to 211,505 units, scooter sales grew by 15 percent to 166,749 units and electric vehicle sales surged by 50 percent to 27,976 units. The company's international business (exports) also saw growth of 22 percent.

Royal Enfield experienced a significant surge in May 2025, posting monthly sales of 89,429 motorcycles, marking a robust 26 percent increase compared to the same month last year. The company's domestic sales contributed significantly to this performance. A key driver for this growth was the outstanding performance in exports, which soared by 82 percent to 13,609 motorcycles, up from 7,479 units in May 2024.

Maruti Suzuki India, the country’s largest passenger vehicle maker, reported total sales of 180,077 units in May 2025, demonstrating a 3.17 percent growth compared to 174,551 units sold in May 2024. Domestic sales, including Light Commercial Vehicles (LCV), stood at 138,690 units, experiencing a 5.46 percent decline from 146,694 units in May 2024. Sales to other OEMs also saw a marginal dip of 3.07 percent, reaching 10,168 units in May 2025. Conversely, exports surged by 79.76 percent YoY, totalling 31,219 units in May 2025 compared to 17,367 units in May 2024. Within passenger vehicles, while the Mini and Compact segment saw a decrease in sales, the Utility Vehicles segment demonstrated slight growth.

Tata Motors presented a contrasting picture, with total sales in the domestic and international markets for May 2025 standing at 70,187 units, a decline from 76,766 units in May 2024. Domestic sales for Tata Motors were 67,429 units, with Commercial Vehicle (CV) domestic sales at 25,872 units (a 9 percent year-on-year decrease) and Passenger Vehicle (PV) sales at 42,040 units (an 11 percent decline). In terms of international business for commercial vehicles (CV IB), Tata Motors saw a significant increase of 87 percent to 2,275 units.

Hyundai Motor India (HMIL) reported total monthly sales of 58,701 units in May 2025. Domestic sales for HMIL were 43,861 units. The company noted that the availability of some critical models was impacted due to a scheduled biannual plant maintenance shutdown during the month. Export sales for HMIL reached 14,840 units.

Mahindra & Mahindra, the SUV specialist, reported robust sales performance in May 2025, with overall auto sales reaching 84,110 vehicles, marking a significant 17 percent YoY growth. This was largely driven by the Utility Vehicles (UV) segment, which saw domestic sales rise by 21 percent to 52,431 units, contributing to a total of 54,819 UVs sold including exports. The commercial vehicles segment also performed well domestically, recording 21,392 units. Exports saw exceptional growth, surging by 37 percent to 3,652 units in May 2025.

Toyota Kirloskar Motor (TKM) continued its positive sales momentum in May 2025, reporting a total of 30,864 units sold, a 22 percent growth over May 2024. Domestic sales played a crucial role, reaching 29,280 units. The company also contributed to exports with 1,584 units.

Kia India maintained its strong growth trajectory for the fifth consecutive month in May 2025, dispatching 22,315 vehicles in the domestic market. This performance reflects a healthy 14.43 percent year-on-year growth when compared to the 19,500 units sold in May 2024.

Ashok Leyland saw a 5 percent increase in its total domestic vehicle sales in May 2025, reaching 14,534 units, up from 13,852 units in May 2024. This growth was primarily driven by its Medium and Heavy Commercial Vehicle (M&HCV) segment, with M&HCV Trucks increasing by 12 percent to 7,466 units and M&HCV Buses growing by 1 percent to 1,920 units. Light Commercial Vehicle (LCV) domestic sales experienced a slight decrease of 3 percent to 5,148 units.

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Reporting a revenue of over INR 500 billion for the first time, up 12 percent year-on-year, on the basis of automobiles are spares in FY25, Bajaj Auto Ltd has revealed that volumes rose seven percent YoY during the respective period with a strong performance in the first half and a relatively soft performance in the second half.

Observing a solid rebound (double digit volume and revenue growth) in exports, the Pune-based company earned an all-time high EBITDA of INR 101 billion, up 14 percent YoY. PAT also hit a new record at over INR 80 billion. With a revenue of around INR 55 billion from electric vehicles (20 percent of its domestic), the company, with a full PLI certified portfolio, underlined its organisation agility and adaptability with significantly improved unit economics in a journey spanning over the last three years.

With the refreshed Duke 200/250 and the new Adventure 390, the KTM portfolio of Bajaj Auto experienced strong momentum in FY25. Also the Triumph motorcycle portfolio with sales up 60 percent YoY. The KTM and Triumph motorcycles sold one lakh units domestically

The commercial vehicles portfolio of the company comprising mainly of three-wheelers saw a revenue increase of over INR 100 billion. It combined the tradition ICE vehicle business and the newly developed electric vehicle business. The launch of GoGo electric three-wheeler and a wide network of over 850 dealerships helped to increase the momentum.

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Disruptive events such as the Red Sea crisis and the Russia-Ukraine war have caused a need to have a closer look at the role of Chief Financial Officers (CFOs). A renewed approach demands that CFOs act as a change catalyst within the automotive supply chain to tackle future hurdles. To ensure stability in the Indian automotive industry filled with technological advancements, especially in alternative energy vehicles, CFOs are acting as co-pilots of transformation in the Indian automotive supply chain, opined Former Additional Secretary of the Department of Commerce, Government of India, Anand Swarup, during the ACMA CFO and Supply Chain Conference on 28 May 2025, in New Delhi.

The event brought to the forefront discussions on how the role of CFO’s has been changing over the year and saw participation from speakers from different organisations, including Maruti Suzuki India CFO Arnab Roy, among others. 

The speakers highlighted the evolution of customer demands, market dynamics and innovation due to the volatile business environment. Speaking at the event, Partner and National Auto Tax Leader at EY India, Saurabh Agarwal, said, “The CFO no longer works as an accountant, but dons multiple hats such as a risk manager and a strategic partner for resilience.”

“The leader must focus on execution and being agile in a dynamic environment to build strong relationships with other departments and ensure faster time to market. Staying agile will help an OEM to better handle changing customer demands and be able to introduce new features and variants faster,” he added.

Enumerating how flexibility helps the CFO devise strategies for optimising auto production, managing risks and adapting to supply chain disruptions, Roy said, “Real-time decisions must be made in today’s volatile world. As a result, the CFO’s role is now expanding to cover a gamut of subjects such as sustainability, location strategy and choice of appliances. Since we are within a multi-dimensional environment at present, the CFO’s role is moving from a cost controller to a continuity architect.”

Further describing the changing role of a CFO in a volatile uncertain complex and ambiguous world, it was discussed that CFOs must act as change catalyst in the automotive supply chain. While enumerating the above, Anant Swarup said, “The CFOs are not naysayers and their image of being cost-cutting agents is gradually changing. They are supply chain whisperers and co-pilots of transformation. Data-driven risk modelling helps them make accurate future decisions and turns them into participative entities.”

The current world scenario mandates a CFO’s financial expertise to assess vendor performance, identify cost-saving opportunities and process improvements, analyse costs and mitigate supply chain risks. Alluding to the same, Roy explained, “The CFO can build a resilient supply chain through cash visibility and crisis foresight. Relocation with risk-adjusted precision is necessary as it helps prepare risk-adjusted return-on-investments models for various situations. The CFO must also build redundancies and incorporate inventory industrial planning into the company’s business plan. As the world de-globalises due to geo-political scenarios, auto manufacturers are being forced to reassess their supply chains.”    

“Seventy-five percent of automotive revenue is attributable to raw materials. Supply chain management provides a competitive edge. Yet another role for the CFO would be to optimise capital for crisis situations that may include geopolitical shifts,” Roy added.  Speaker Sunil Bohra, CFO, Uno Minda Group, while describing how CFO’s act as change catalyst in automotive supply chain, said, “Every automotive plant in India produces roughly 14,000 parts.” He explained that supply chain management must account for cost control and operational efficiency, leading to effective allocation of resources, high profitability and less waste. It is the supply chain-CFO partnership that decides the future of automotive companies and manufacturers.

Though geo-political scenarios are predominantly uncertain, CFO’s have the arsenal to make calculated decisions for mitigating risks. EY India Partner, Tax, Pankaj Jain, explained, “When changes happen at the geo-political level, we must take some calls. For example, one such concept could be focusing on developing tier II and tier III vendors in India.”

The speakers also discussed on how discipline and immense hard work during the entire shift has helped China reach where it is in the auto manufacturing sector. Highlighting the Indian scenario vis-a-vis China, President- Finance and Strategy at Minda Corporation, Ajay Agrawal, said, “India must stop trying to beat China in the manufacturing industry right now since we have only been in the supply chain business for 2-3 years. The best way forward is for us to partner with China.”  

A smart supply chain-CFO partnership is possible through digitalisation. The CFO's role today has undergone a paradigm shift, making him a partner of strategic convergence across the supply chain, finance and digitalisation as the partnership is no longer just an operational topic.

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Gurgaon-headquartered BMW India Financial Services, the subsidiary of the BMW Group, which focusses on retail finance, commercial finance and insurance solutions, has appointed Andreas Modlmayer as the new Managing Director and Chief Executive Officer.

He succeeds Jaejoon Lee, who successfully led the company as a leading end-to-end automotive financial solution for the BMW brand in the country.

Modlmayer has been associated with the BMW Group since 2000 and was the CEO of BMW Austria Bank in Greece. He has extensive leadership experience for BMW Group Financial Services and has worked across geographies such as New Zealand, China and Hong Kong. He started his career with BMW Bank Munich in Sales and Marketing function.

Lisa Ng, Regional Chief Executive Officer of BMW Group Financial Services for Asia Pacific, said, “Andreas Modlmayer brings with him valuable expertise and leadership acumen, with successful development of BMW Financial Services in diverse markets for over two decades. India is an important market for us, and we are confident that he will further add to the company’s growth as he takes charge of BMW India Financial Services.”

“We thank Jaejoon Lee for his immense contribution to BMW India Financial Services in the recent years. He successfully steered the company with new initiatives in product offerings and customer centricity and strengthened the foundation for future growth. We wish him all the best as he returns to BMW Korea once again,” added Ng.

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