Passenger vehicles could see a price decline between 3.5%–8.5%, majority two-wheelers 7.8% after GST rate cut: Crisil

/2 min read

ADVERTISEMENT

Small cars and two-wheelers with an engine size of less than 350cc are expected to see the biggest price cut.
THIS STORY FEATURES
Mahindra & Mahindra Ltd Fortune 500 India 2024
Hyundai Motor India Ltd Fortune 500 India 2024
Maruti Suzuki India Ltd Fortune 500 India 2024
Tata Motors Ltd Fortune 500 India 2024
Passenger vehicles could see a price decline between 3.5%–8.5%, majority two-wheelers 7.8% after GST rate cut: Crisil
In fiscal 2026, Crisil projects a marginal uptick for passenger vehicles—a lower single-digit growth—while two-wheelers could see higher single-digit growth.  Credits: Narendra Bisht
In this story

With the announcement of the revamped GST structure featuring three slabs of 5%, 18%, and 40%, segments in the automobile industry have undergone significant rate revisions, with some categories now falling under either the 18% or 40% slab.

According to ratings agency Crisil, prices of entry-level internal combustion engine (ICE) hatchbacks, Maruti Suzuki WagonR, for instance; premium hatchbacks such as Maruti Suzuki Swift; compact, sub-four-metre sedans such as Maruti Suzuki Dzire; and sub-compact SUVs with a petrol engine capacity of less than 1200cc or diesel engines with less than 1500cc displacement (such as Tata Punch) will see a price decline of about 8.5%.

The entry-level segment has borne the brunt of stricter regulations, including the BS-VI emission norms and the implementation of safety features such as airbags and ABS as standards, which have pushed the price of entry-level vehicles out of reach for many consumers, including prospective first-time car buyers.

Meanwhile, the prices of large sedans such as the Volkswagen Virtus and the Hyundai Verna; compact SUVs such as the Maruti Suzuki Brezza and the Hyundai Venue; mid-size SUVs such as the Creta; and MPVs with an engine size of less than 1500cc, such as the Maruti Suzuki Ertiga, will reduce by about 3.5%.

Furthermore, prices of premium SUVs such as the Mahindra XUV700 and MPVs with engine size less than 1500cc—such as the Toyota Innova—will fall about 6.7%.

For two-wheelers, prices of all categories, except for premium two-wheelers with an engine size of more than 350cc, are expected to fall by about 7.8%. For premium two-wheelers, the prices will, on the contrary, increase by about 6.9%.

Fortune India Latest Edition is Out Now!
India's Top 100 Billionaires

August 2025

As India continues to be the world’s fastest-growing major economy, Fortune India presents its special issue on the nation’s Top 100 Billionaires. Curated in partnership with Waterfield Advisors, this year’s list reflects a slight decline in the number of dollar billionaires—from 185 to 182—even as the entry threshold for the Top 100 rose to ₹24,283 crore, up from ₹22,739 crore last year. From stalwarts like Mukesh Ambani, Gautam Adani, and the Mistry family, who continue to lead the list, to major gainers such as Sunil Mittal and Kumar Mangalam Birla, the issue goes beyond the numbers to explore the resilience, ambition, and strategic foresight that define India’s wealth creators. Read their compelling stories in the latest issue of Fortune India. On stands now.

Read Now

In the case of ICE tractors and fuel cell motor vehicles, including hydrogen vehicles, prices will decline by about 6.3%. Meanwhile, prices of three-wheelers, LCVs, MHCVs and buses will reduce by about 7.8%.

A caveat that should be noted is that the analysis conducted by Crisil does not account for any pass-through that may occur from automotive component manufacturers to original equipment manufacturers (OEMs) in the form of GST reduction, as all automotive components have been brought under the 18% GST regime.

In fiscal 2026, Crisil projects a marginal uptick for passenger vehicles—a lower single-digit growth—while two-wheelers could see higher single-digit growth. Tractors, on the other hand, will see a continued traction with 4-7% growth, while commercial vehicles may see flattish-to-marginal-positive growth.

Crisil also notes that the automotive aftermarket segment is slated to benefit as all components will now be levied with an 18% GST. This would entail a reduction in prices of components hitherto taxed at 28% by about 7.8%.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.