New Delhi: The Indian automobile sector is bracing for a shake-up after the government’s sweeping GST 2.0 reforms slashed tax rates across categories. Prices of popular cars have dropped sharply, and no brand seems more optimistic about the ripple effect than Hyundai.
According to a report from Moneycontrol, Hyundai Motor India expects the sub-4 metre SUV segment, where it sells models like the Exter and Venue, to clock the fastest growth in the months ahead. The company is preparing to ride on this shift as buyers flock to more affordable entry SUVs.
The big GST reset
Before GST 2.0, internal combustion engine cars faced a 28% GST plus a cess ranging from 1% to 22%. For small cars, that meant a tax burden of 29-31%. Larger and luxury models carried an even heavier load, sometimes up to 50%. With the cess now scrapped, the new structure has just two slabs — 18% for smaller cars and 40% for bigger models.
That means prices have dropped steeply across showrooms. Hyundai’s Exter now comes cheaper by up to ₹89,209, while the Venue has seen cuts as high as ₹1,23,659. Even the Creta, a top-selling SUV in India, has shed up to ₹72,145 from its sticker price. On paper, this is the steepest tax cut in decades for the sector.
Hyundai’s outlook
Hyundai’s COO Tarun Garg noted that in his three decades in the industry, he has not seen cuts of this magnitude. He said earlier reforms brought 4-8% changes, but GST 2.0’s 11-13% drop on smaller cars is unprecedented. The industry, down nearly 2% between April and August this year, could bounce back with 5% growth between September and March, he added.
First-time buyers are expected to play a major role. Hyundai’s share of such customers has already jumped from 31% in FY20 to 40% now. Garg pointed out that affordability is only half the story — aspiration has become equally important in recent years.
Why small SUVs matter most
The small SUV space has become a sweet spot for carmakers. These vehicles combine the compactness of hatchbacks with the elevated stance and features of bigger SUVs. With prices now lowered, this segment could attract buyers upgrading from hatchbacks or even motorcycles.
Hyundai sold 77,412 units of the Exter and 1,19,113 units of the Venue in FY25. Overall, the Exter segment recorded sales of 2,73,984 units, while Venue volumes crossed 10,84,611 units. The company will also launch the new-generation Venue on October 24, a move expected to further push demand.