Core Insights - The reduction in GST rates on select vehicles has revitalized retail sentiment, leading to increased demand for auto loans and passenger vehicle sales [1][3][6] Vehicle Loan Growth - In September, India's banking sector experienced a vehicle loan growth of 7.3% year-on-year, a decline from the 14% growth seen in the same month the previous year [2] - For the first half of the current financial year, vehicle loan growth ranged from 7.3% to 10.8%, compared to a rise of 13.9% to 17.2% in the same period last year [2] Impact of GST Reform - The GST reforms effective from September 22 created a two-slab tax system, significantly reducing rates on certain vehicle categories, which has led to a recovery in vehicle demand [3][8] - State Bank of India reported a nearly 10% year-on-year growth in auto loans to ₹1.28 trillion during the September quarter, attributing this to the GST cuts [8] Segment Performance - Commercial vehicle sales increased by over 8% year-on-year to 240,000 units, while passenger vehicle sales fell by 1.5% to 1.04 million units, although there were signs of recovery towards the end of the quarter [9] - The two-wheeler segment saw over 7% year-on-year growth, totaling 5.56 million units sold in the July-September period [12] Market Sentiment and Future Outlook - Bankers noted that the recent uptick in vehicle loans is still in early stages, with sustainability dependent on continued demand through the festive season [6] - IndusInd Bank reported a significant rebound in vehicle loan disbursements post-GST implementation, with expectations of continued demand momentum supported by the festive season and improved economic activity [17][16] Commercial Vehicle Segment Challenges - Despite some growth in commercial vehicle sales, lenders remain cautious due to borrower over-leverage and economic sluggishness, leading to tightened underwriting standards [21][23] - The effective cost for customers in the commercial vehicle segment has not changed significantly, as manufacturers have reduced discounts rather than passing on the full benefits of GST cuts [20][21]

Core Insights - Retail sales of locally-produced passenger vehicles in China increased by less than 5% to 1.995 million units in August 2025 compared to 1.906 million units in August 2024 [1] - The domestic passenger vehicle market experienced its seventh consecutive month of growth, driven by government sales incentives and price competition among manufacturers [2] - The Chinese government plans to continue funding subsidy programs until at least the end of 2025 while urging manufacturers to limit excessive discounting to protect smaller EV brands [3] Sales Performance - Retail sales of Chinese-owned brands rose by 9% to 1.32 million units in August, making up two-thirds of total passenger vehicle sales [4] - New energy vehicle (NEV) sales increased by 5% year-on-year to just over 1.079 million units in August, showing a slowdown compared to earlier in the year [4] - Overall passenger vehicle retail sales in China for the first eight months of 2025 rose by 9.5% to 14.741 million units from 13.464 million units in the same period last year, primarily driven by strong demand for sedans and SUVs [4] - NEV sales for the same period increased by 25% to 7.540 million units, representing 51% of total passenger vehicle sales [4]

Core Insights - Bank of America CEO Brian Moynihan discussed the implications of President Trump's new auto import tariffs, which impose a 25% tariff on passenger vehicles, light trucks, and certain auto parts imported into the U.S. [1][2] Economic Impact - The new tariffs are expected to increase car prices and slow vehicle purchases, reflecting a broader market adjustment [2] - Moynihan indicated that the tariffs could contribute to a 0.25% increase in inflation and potentially slow growth in countries like Japan that export to the U.S. [3] - Bank of America projects positive U.S. growth of 2%, with an initial 1.5% in the first quarters, despite the tariff impacts [4] Consumer Behavior - Despite concerns about consumer spending, Bank of America has observed a 5% increase in customer spending compared to the previous year, indicating resilience in consumer behavior [6] - Spending on food, restaurants, and entertainment has increased, driven by higher prices [7] - The unemployment rate stands at 4.1%, with strong wage growth contributing to consumer confidence [8] Business Sentiment - Consumer sentiment dropped nearly 11% in February, yet spending remained stable, suggesting a disconnect between sentiment and actual spending behavior [9][10] - Small and medium-sized businesses are cautious, borrowing less than before the pandemic, indicating a wait-and-see approach regarding the economic impact of tariffs [11][12]

Group 1 - President Trump announced a 25% tariff on all cars not made in the United States, effective April 2, impacting the auto industry significantly [2][4] - General Motors stock fell approximately 6% in early trading, while Stellantis decreased by over 1%, while Tesla saw a slight increase and Ford's shares remained stable [2][3] - Deutsche Bank analysts indicated that Tesla and Ford are relatively insulated from the tariffs due to their vehicle assembly locations, whereas GM has the highest exposure to Mexico [3] Group 2 - The tariffs will apply to imported passenger vehicles, light trucks, and essential automobile parts such as engines and transmissions [4]