Budget 2019: Auto companies to see demand boost over less than Rs 5 lakh tax rebate

The government’s move to exempt income up to Rs 5 lakh from tax in the interim budget is likely to boost demand for entry-level cars and 2-wheelers.

By putting more disposable income in the hands of consumers, automotive companies such as Maruti Suzuki, Hyundai, HeroMotoCorp and Bajaj auto are likely to see a surge in demand from first-time buyers.

“While it is sheer disappointment for the auto industry that there was no cut in GST and no tax benefit to alternate fuel vehicles, the increase in net disposable income  due to no income tax till Rs 5 lakh is expected to positively impact first time buyers. This will positively boost sales of small cars like Tata Tiago, Hyundai Santro, Renault Kwid and Maruti Suzuki Wagon R and upcoming new small hatchback from Maruti Suzuki,“ said Gaurav Vangaal, Senior Analyst, IHS Markit.