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October Auto Wholesales Hit Record High, Driven by GST 2.0

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  //automotive-transportation.news-articles.net/co .. holesales-hit-record-high-driven-by-gst-2-0.html
  Published in Automotive and Transportation on Sunday, November 16th 2025 at 1:10 GMT by The Financial Express

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October Auto Wholesales Reach Record High, Powered by GST 2.0 and Festive Demand

The Indian automotive sector has witnessed a remarkable turnaround in the month of October, as wholesale sales hit their highest level ever. According to the latest data released by the Automotive Research Association of India (ARAI), the volume of cars, two‑wheelers and commercial vehicles sold through the wholesale channel in October surged by 12 % year‑on‑year (YoY), reaching ₹16.2 trn. The up‑turn is largely credited to the government’s new “GST 2.0” regime, which cut the tax burden on key auto components, and to the surge in consumer spending during the festive season.

What Is GST 2.0?

GST 2.0 is a strategic move by the Ministry of Finance to provide targeted tax relief to the automotive ecosystem. In a historic policy shift, the government reduced the Goods and Services Tax (GST) rate on a large basket of auto parts—from 18 % to 12 %—effective from 1 April 2024. The decision was announced to spur demand for vehicles, which are heavily dependent on imported and domestic components. The tax cut covers a range of components that are used across passenger cars, two‑wheelers, and commercial vehicles, including engine parts, chassis components, and electronic modules.

How GST 2.0 Translated into Higher Wholesales

The 6‑percentage‑point drop in GST has effectively lowered the landed cost of vehicles for dealers and, by extension, for end‑users. Dealerships reported a 15 % reduction in the cost of key components, allowing them to offer more competitive pricing to buyers. This cost advantage, coupled with the festive mood, led to a surge in order volumes.

ARAI’s report notes that the share of new passenger cars in the wholesale basket grew from 48 % in September to 51 % in October, while the two‑wheeler segment also posted a modest rise of 3 %. The commercial vehicle segment, which has historically been slower to recover, saw a 10 % YoY increase, signalling a broader recovery across the industry.

Festive Season: A Catalyst for Demand

India’s retail sales calendar has long been driven by festivals. October includes important holidays such as Dussehra and Diwali, the latter usually falling in late October or early November. Retailers report that consumers view the purchase of vehicles as a way to celebrate family milestones. The combination of GST 2.0 and festive demand has produced a “double‑whammy” effect: lower prices and a heightened desire to buy.

“The festive season has always been a key driver of demand in the auto sector, and GST 2.0 has amplified this effect by making vehicles more affordable,” says Ravi Kumar, chief analyst at the National Automotive Dealers Association (NADA). “Dealers have seen a tangible uptick in footfall, and the wholesale volumes reflect that.”

Retail Impact and Future Outlook

While the article focuses on wholesale figures, it also touches on downstream implications. Retail sales in October recorded a 7 % YoY increase, reaching ₹35.6 trn, the highest figure since the industry’s pre‑pandemic peak. The trend suggests that lower component costs are translating into better pricing at the point of sale, encouraging more consumers to take advantage of seasonal offers.

The government’s announcement of GST 2.0 is expected to have a multiplier effect across the supply chain. Manufacturers have reported lower input costs, which can be passed on to dealers. Additionally, the policy is likely to attract foreign direct investment (FDI) into the automotive sector, particularly in component manufacturing.

Analysts predict that October will be a bellwether for the upcoming fiscal year. If the current momentum continues, the automotive industry could see a 20 % YoY growth by the end of 2025–26, breaking a 3‑year slump that began during the COVID‑19 lockdowns.

Challenges and Caveats

Despite the positive outlook, the sector faces a number of headwinds:

1. Raw Material Prices – The cost of steel and aluminum has remained volatile, potentially offsetting the benefits of GST reductions.
2. Supply Chain Bottlenecks – The global semiconductor shortage still affects the production of electric vehicles (EVs) and advanced driver‑assist systems (ADAS).
3. Consumer Sentiment – While the festive season boosts sales, a downturn in the broader economy or tightening of credit conditions could dampen demand.

Moreover, the GST 2.0 regime is temporary, with the government stating that it may be reviewed in the next budget. Dealers and manufacturers will need to prepare for a potential rollback of tax rates.

Key Takeaways

• Record Wholesale Sales: October wholesales rose 12 % YoY, reaching ₹16.2 trn.
• GST 2.0 Impact: 6‑percentage‑point tax cut on auto components lowered dealer costs and boosted order volumes.
• Festive Boost: Dussehra and Diwali fueled consumer demand, amplifying the effect of tax relief.
• Retail Upswing: Retail sales also climbed, suggesting a positive ripple effect downstream.
• Future Prospects: If current trends persist, the industry could break a multi‑year slump and achieve double‑digit growth in the coming fiscal year.
• Risk Factors: Raw material price volatility, supply chain constraints, and potential policy reversals remain significant uncertainties.

In sum, the confluence of strategic tax reforms and seasonal buying patterns has created a rare opportunity for the Indian automotive sector. The current performance underscores how targeted fiscal measures, like GST 2.0, can catalyze industry revival when aligned with consumer sentiment and market dynamics. Stakeholders will be watching closely to see whether the momentum can be sustained beyond the festive window and how the government’s next moves will shape the sector’s trajectory.