Entry-level hatchbacks and compact SUVs have recorded stronger sales after the GST 2.0 tax changes, with the benefit particularly visible in smaller passenger vehicles.
Wholesale data for the first five months of FY27 showed entry-level hatchbacks increasing their share of passenger vehicle sales from 23% in the six months before the GST reforms to 33%.
Small cars received a reduction in the effective tax rate from 29% to 18%. However, the recovery was largely limited to entry-level models, while the broader hatchback segment remained around 21% of the passenger vehicle market.
Sport utility vehicles continued to gain share, reaching 58% in FY27 so far, compared with 56% during the six months before the GST reduction.
Within the SUV market, entry-level models recorded strong growth. Sales of sub-four-metre SUVs increased 21.3% to 1,625,984 units from 1,339,995 units in the comparable period.
Midsize SUVs recorded an even sharper increase, with sales rising 36.8% to 1,064,250 units from 777,999 units.
The report noted that under GST 2.0, all entry-level hatchbacks benefit from the lower 18% tax slab. Some sub-four-metre SUVs also attract the 18% rate, subject to specified engine-capacity criteria, while larger vehicles face different tax treatment.
The entry-level hatchback segment has also seen limited new product activity in recent years, while the SUV market has received multiple launches and updates.
