Entry-level hatchbacks gained share after the GST reduction, while SUV sales continued to expand across key segments.
The share of entry-level hatchbacks increased to 33% during the first five months of FY27, compared with 23% in the six months before the GST cuts. The effective tax rate on small cars was reduced from 29% to 18%.
Despite the improvement in entry-level hatchback demand, the broader hatchback segment remained largely stable at around 21% of the passenger vehicle market. Limited new launches in the segment have also influenced its performance.
SUVs continued to account for the largest share of passenger vehicle sales, reaching 58% in FY27 so far, compared with 56% during the six months before the GST reduction. Several new launches and model updates have supported demand in the segment.
Sub-4-metre SUV sales increased 21.3%, rising to 1,625,984 units from 1,339,995 units in the comparable period. Midsize SUV sales recorded stronger growth of 36.8%, increasing to 1,064,250 units from 777,999 units.
The GST treatment varies across vehicle categories depending on factors including vehicle size and engine specifications. While small cars now attract an effective 18% tax rate, some sub-4-metre SUVs can also qualify for the lower rate based on the applicable criteria, while larger vehicles remain subject to different taxation.
The shift in the market indicates stronger consumer interest in SUVs alongside some recovery in demand for entry-level hatchbacks following the tax reduction.
