GST Cut Spurs Hatchback Rebound in India as SUV Preference Holds in Resale Market

Overview

• Hatchbacks lifted their share to 24.4% of passenger vehicle sales in October–December 2025 after the GST rate on most small cars fell from 28% to 18% effective September 22.
• Sequential hatchback volumes rose about 20% in Q4 2025, with industry small-car dispatches up roughly 23% following the tax change.
• Maruti Suzuki’s entry and compact models posted a 91.8% year-on-year surge in December, triggering waiting periods of up to six weeks and prompting production adjustments.
• Tata Motors projects roughly 18–20% growth for its hatchbacks in H2 FY26, yet it does not expect a major shift in overall segment share.
• Used-car data show SUVs retaining faster turnover and stronger residual values than hatchbacks, indicating stable buyer preference even as new small-car prices fall.