Car and Two-Wheeler Prices May Drop by 8–12% After GST Cuts

The automobile sector, one of the largest employers in India, is set to benefit significantly from the Goods and Services Tax (GST) Council’s recent rate reductions. Cars and two-wheelers could see price drops ranging from 8% to 12%, making vehicles more affordable for millions of buyers.

 

Key Changes in GST Rates

• Small Cars: Vehicles with petrol engines up to 1200 cc or diesel engines up to 1500 cc have shifted from the 28% GST slab to 18%.
• Two-Wheelers: Motorcycles with engines up to 350 cc have also moved from 28% to 18%, cutting prices by an estimated ₹8,000–₹10,000.
• Mid-Segment Models: Popular cars such as Maruti Swift, Hyundai i10, Tata Tiago, and Renault Duster are expected to get cheaper by ₹40,000–₹60,000.
• Premium Models: Cars priced between ₹15–20 lakh may see a reduction of around ₹1.5–2 lakh, as their overall tax burden falls.

 

Industry Response

Automobile companies are recalculating prices and are expected to announce revised rates soon. Industry experts say the move will benefit around 60% of cars sold in India, as most fall within the small to mid-size category.

A senior executive from Maruti Suzuki said the reforms would give a much-needed boost to demand, especially during the upcoming festive season. Similarly, two-wheeler manufacturers like Hero MotoCorp, Bajaj Auto, and TVS expect a surge in rural and urban markets alike.

 

Consumer Impact

The reduction is likely to attract first-time buyers and accelerate replacement purchases among middle-class families. Lower prices in the small car and commuter bike segment could reinvigorate the industry, which had seen sluggish sales in recent months.

 

Outlook

Experts believe the tax relief will not only stimulate automobile sales but also create fresh momentum in ancillary industries like components, dealerships, and service centers. With affordability improving, the auto sector is set to play a major role in driving India’s consumption-led growth.