Auto Stocks Soar: Hero MotoCorp, Maruti Suzuki, Tata Motors Up 9% - What’s Driving the Rally?

The shares of automobile makers like Hero MotoCorp, Maruti Suzuki, Bajaj Auto, M&M and Tata Motors jumped up to 9% on Monday, August 18, 2025, as there are reports of a likely GST cut on entry-level two-wheelers, compact cars and hybrids.

What Is This GST Cut About?

The government is planning to rationalise GST into two primary slabs of 5% and 18% by September 2025, in what will be the biggest indirect tax reform since GST was introduced in 2017.

Almost all products which are taxed at 12% at present, will move to the lower 5% rate.

According to a report by Emkay Global, the GST restructuring could bring a 50-60 basis point (bps) decline in inflation over a year.

"The largest impact—of ~40bps—will come from certain goods in the F&B category moving to the 5% slab (from 12% now)," the firm said.

The report further added that lower GST will put more dispensable income in the hands of consumers, and "such tax changes should boost consumption in FMCG, consumer durables, autos, cement, and similar sectors, with even the Insurance sector seeing a gain."

The changes are expected to be implemented by Diwali and they seek to simplify the tax system and ease costs for middle-income households.

How Are Vehicles Taxed Currently?

At present, vehicles are taxed under multiple slabs combining GST as well as cess, depending on the engine size, length and ground clearance of the vehicle. The government is now also weighing a flat 18% claim on mass-market vehicles. This brings two-wheelers under 350cc, small cars up to 1,200cc, and some hybrids down sharply from the existing 28–31% range, while luxury cars and SUVs would continue to attract the top 40% bracket.

According to Emkay Global, Hero MotoCorp, with a dominant 79% share in entry-level two-wheelers, and TVS Motor which has a 25% share in scooters, would be at the forefront of gains.

Additionally, ancillary suppliers like Pricol, Sandhar Technologies and ASK Automotive, with heavy exposure to two-wheelers could also benefit.

Automobile Stocks

At 11:03 am, the shares of Hero MotoCorp were trading at Rs 5,023.35 per equity share, up by 6.74% as compared to its previous close of Rs 4,706.10 per scrip on the BSE on Monday.

The shares of Tata Motors were trading 3.01% higher at Rs 684.55 per equity share as compared to its previous close of Rs 664.55 per scrip on the BSE on Monday.

Mahindra & Mahindra stocks were trading at Rs 3,410.20 per equity share, 4.43% higher as compared to its previous close of Rs 3,265.50% per scrip.

Also Read: Will Your Groceries, ACs & Cars Get Cheaper? Govt Plans GST Overhaul