Auto shares traded mixed as the GST Council hiked the cess rate by 2 percentage points on SUVs and MUVs in its 50th meeting on Tuesday. The Nifty Auto index saw mild cuts of 0.13%, while Hero MotoCorp, Tata Motors and M&M dragged the index down, falling up to 0.92%. However, Eicher Motors, Balkrishna Industries, and Ashok Leyland gained in trade, with Ashok Leyland jumping 3.8% intraday to Rs 172.75 apiece.
GST Council Decision
Earlier, cars popularly known as SUVs, with a length over 4-meters, an engine capacity of over 15,000 CC, ground clearance of 170 mm or more would be liable for a 22% compensation cess. This cess was over and above the 28% GST that buyers have to pay. The law has now been changed to ensure the inclusion of all utility vehicles, including MUVs and XUVs as the loophole was closed. All utility vehicles, regardless of the name they go by, fall under the purview of the law, as the ‘popularly known as SUV’ consideration has been struck off.
Auto stocks performance
In the OEM segments, the stock prices of Maruti Suzuki, TVS Motors, and Hero MotoCorp have risen by 19.5%, 32%, and 14.7% respectively in the last 6 months. The stock price of Bajaj Auto rose by a whopping 38.9% in the last 6 months. In the ancillaries segment, the stock prices of Samvardhana Motherson International, UNO Minda, and Minda Corporation witnessed a surge of 19.8%, 9.4%, and 39.1% respectively in the last 6 months.