Following the recent GST revision on passenger vehicles, major automakers swiftly reduced prices, aiming to boost affordability and consumer confidence ahead of the festive season amidst ongoing economic shifts.
India’s recent move to overhaul the Goods and Services Tax (GST) on passenger vehicles, which took effect from September 22, 2025, has clearly sparked a wave of price cuts from some of the biggest automakers. This change is a pretty big deal — it marks a notable shift in the way the automotive aftermarket operates now. Basically, under the new tax laws, cars powered by petrol and diesel are now taxed at either 18% or 40%, depending on their size and segment. That’s quite a contrast to the earlier system, where combined GST and cess rates hovered somewhere between 29% and 50%. The main goal here? To make passenger vehicles more affordable, encourage more buyers to step in, and support the domestic auto industry as part of a wider economic growth plan—especially in the lead-up to the festive season.
Industry leaders didn’t waste any time either—they moved quickly to pass on these benefits, slashing their prices across many models. For example, Mahindra & Mahindra (or M&M) announced immediate reductions in their internal combustion engine (ICE) SUVs, including popular models like the Thar, Scorpio, and XUV700. The savings on these vehicles go up to Rs 1.56 lakh. Interestingly enough, their diesel version of the XUV3XO SUV is leading with the biggest cut—Rs 1.56 lakh—while models like the Bolero Neo and other SUVs also saw prices drop by over Rs 1 lakh. The Scorpio-N offers savings of up to Rs 1.45 lakh, the Thar Roxx Rs 1.33 lakh, and the flagship XUV700 RS Rs 1.43 lakh. Such speedy adjustments clearly indicate M&M’s strategy to make the most of the upcoming festive demand and stay competitive.
Similarly, Toyota Kirloskar Motor announced plans to fully pass on the GST benefits, with discounts ranging from around Rs 48,700 on the compact Rumion to as much as Rs 3.49 lakh on the premium Fortuner SUV. Varinder Wadhwa, the company’s Vice President of Sales and Service, highlighted how this reform helps boost affordability and, in turn, consumer confidence. Renault India didn’t lag behind either— they tweaked the prices on models like the Kwid, Triber, and Kiger, reducing costs by up to Rs 96,395, and aiming to attract more buyers during this busy season. Tata Motors also stepped in, offering aggressive price cuts across their range, including the Nexon, which got a Rs 1.55 lakh reduction, plus their popular SUVs like the Harrier and Safari. All in all, these moves—including reductions across small cars and SUVs alike—signal a broader industry effort to capitalize on the benefits of the GST revision.
Now, the main reason for these reforms stems from the government’s initiative to simplify GST slabs—from four down to just two main rates: 5% and 18%. There’s also a 40% slab for high-end vehicles. Simplifying the system makes compliance easier, cuts down on complications, and also makes vehicles more affordable for everyday folks. Industry watchers see this as a well-timed boost to domestic consumption, especially considering broader economic hurdles and external trade tensions India’s facing. Financial analysts are optimistic too, predicting that consumer confidence will pick up and inflation might ease a bit as the benefits spread along the supply chain.
The markets responded pretty positively right away, with auto stocks climbing to their highest points in nearly a year. Stocks like Mahindra and Eicher Motors saw sharp gains—clearly, investors are feeling pretty confident about a sector that’s getting ready for a busy festival season. At the same time, consumer goods companies enjoyed the benefits of GST rate cuts on many everyday items, which is part of the government’s wider strategy to inject stimulus into the economy.
Interestingly enough, while electric vehicles (EVs) are still eligible for a preferential 5% GST rate, the new tax structure also lowered the GST on hydrogen fuel cell vehicles—cutting it from 12% down to 5%. This move supports India’s green mobility initiatives. It’s kind of a balancing act: lower taxes on internal combustion engine vehicles keep the market moving, but the incentives for cleaner tech like hydrogen fuel cells are maintained or even strengthened.
Looking ahead, other major automakers like Maruti Suzuki are probably going to announce similar price adjustments soon, completing the industry-wide reset to fit the new GST framework. For everyone involved in the auto aftermarket—whether it’s manufacturers, suppliers, dealers, or fleet operators—these changes are likely to bring not just immediate sales boosts but also set new trends in market behavior, pricing, and consumer choices down the line.
All in all, this GST revamp and the resulting vehicle price cuts are a pretty significant milestone for India’s auto industry. They promise better affordability, a boost in demand, and increased confidence across the sector—all just in time for a crucial sales period. Honestly, it’ll be interesting to see how this unfolds in the coming months.
Source: Noah Wire Services