Entry-level hatchbacks have shown signs of recovery following the GST reduction on passenger vehicles, but SUVs continue to strengthen their dominance in India’s car market.
Entry-level hatchbacks accounted for 3.3% of passenger vehicles sold in India during the first five months of FY27, up from 2.3% in the six-month period before the GST rate reduction, according to data from JATO Dynamics.
The tax reduction appears to have helped arrest the decline in the smallest and most affordable passenger-car segment. However, the improvement has largely remained limited to entry-level small cars rather than translating into a broader revival for hatchbacks.
The overall hatchback segment has remained relatively stable at around 21% of the passenger vehicle market.
SUVs, meanwhile, have continued to gain ground. Their share of passenger vehicle sales has increased to 58% in FY27 so far, compared with 56% during the six months preceding the GST changes.
The preference for SUVs is also visible in the used-car market. Data presented alongside the report showed the share of hatchbacks in used-car sales declining while SUVs continued to increase their presence.
The trend indicates that while lower taxes have provided some support to entry-level cars, the broader shift in consumer demand towards SUVs has continued.
