GST rate cut reduces discount pressure for truck manufacturers

The recent rationalisation of GST rates has not only lowered the prices of commercial vehicles but also eased the long-standing pressure on original equipment manufacturers (OEMs) to offer steep discounts in India’s fiercely competitive and price-sensitive truck market, reported Times of India.

Earlier, medium and heavy commercial vehicles (M&HCVs) priced around ₹50 lakh often came with discounts of up to ₹5 lakh—roughly 10% of the sticker price—as OEMs tried to lure buyers with aggressive pricing. However, with the GST rate on vehicles now reduced from 28% to 18%, manufacturers have found room to scale back discounts significantly.

Umesh G Revankar, executive vice chairman of Shriram Finance, told TOI, “Since OEMs have significantly reduced the discounts, the net cost to customers has not really changed much—hardly a big change for customers, especially in the commercial vehicle segment.”


This adjustment essentially absorbed the tax relief into vehicle pricing. While the GST cut lowered base prices, the simultaneous reduction in discounts meant that the overall cost to buyers changed only marginally.

A senior official from a non-banking financial company (NBFC) engaged in commercial vehicle financing noted that while M&HCV prices fell after OEMs passed on the GST rate cuts, discount levels dropped by at least 5–6 percentage points compared with previous levels.

A top executive of a leading truck and bus manufacturer added that the company experienced a 3–4% decline in discount levels, although he could not confirm whether the trend was uniform across the M&HCV segment.

Despite this, some commercial vehicle dealers described the drop in discounts as temporary. “Though OEMs maintain that they don’t resort to discounts, it continues to be a norm in the competitive truck segment,” they said.

With inputs from TOI