Nifty Auto jumps to new high amid FADA’s compensation cess challenge in SC

Auto Stocks Today: India’s automobile sector saw a sharp contrast on Monday: upbeat trading in auto stocks driven by strong November sales numbers, and rising concern among vehicle dealers after indications that the government is unlikely to offer relief on long-pending GST compensation cess refunds.

No relief likely on compensation cess: FADA takes battle to Supreme Court

According to people familiar with the matter, the government is not inclined to offer compensation cess relief to auto retailers, despite repeated representations from the Federation of Automobile Dealers Associations (FADA).

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The industry body has maintained that dealers collectively deposited nearly Rs 2,500 crore as GST compensation cess before GST 2.0 was rolled out. Their contention is that vehicles sold after 22 September still attracted cess outgo, but the government has declined to refund the amount.

With no resolution emerging, FADA has approached the Supreme Court, seeking clarity and relief. The petition is expected to determine whether dealers can recover the cess paid during the transition period. The matter has gained urgency as several dealer groups argue that the cash outflow has squeezed margins across the network.

Nifty Auto hits fresh record high

Even as the cess dispute continued, auto stocks staged a strong session. The Nifty Auto index climbed to a new all-time high, touching 28,075.65 intraday before closing at 27,983.30, supported by sustained buying in two-wheeler and passenger-vehicle counters.

TVS Motor led the index, rising 3.75 per cent to Rs 3,664.00, followed by Hero MotoCorp, which gained 2.03 per cent to Rs 6,300.00. The sector’s outperformance stood out on a day when the broader market ended largely unchanged.

Stock moves: mixed action across major auto names

Bajaj Auto closed marginally higher at Rs 9,090.00, up 0.18 per cent, while Mahindra & Mahindra eased 0.65 per cent to Rs 3,733.00. The Nifty Auto index itself ended with a 0.79 per cent gain at 27,993.00.

Hyundai Motor India was also in focus after reporting a strong set of November numbers. The stock jumped nearly 4 per cent to Rs 2,417, with the company announcing total sales of 66,840 units, a 9.1 per cent rise year-on-year. Domestic sales came in at 50,340 units, up 4.3 per cent, while exports surged 26.9 per cent to 16,500 units, highlighting India’s growing role in the company’s global production footprint.

Tata Motors’ commercial-vehicle division also delivered a robust update, reporting a 29 per cent increase in total sales, with exports nearly doubling from a year ago.

Royal Enfield’s parent, Eicher Motors, posted 1.01 lakh units, marking a 22 per cent jump year-on-year. Atul Auto reported 3,401 units, up 20.3 per cent, with domestic sales rising 10.5 per cent to 2,802 units.

What’s next

With the sector posting healthy volume growth and the index scaling fresh highs, traders will be watching two key triggers:

1) The Supreme Court’s response to FADA’s petition on GST compensation cess, and

2) December sales trends, typically a soft month but seen improving this year due to aggressive discounting and model launches.