GST relief expected to fuel India’s car upgrade wave, EV optimism, says study

While GST reductions on cars fueled a rebound in sales in the festive season, around 80 per cent of buyers surveyed used the tax relief to switch to a higher model, better brand, or premium add-ons, rather than saving the difference, a study has found.

The study by consumer-intelligence and market-research platform SmyttenPulse AI stated that SUVs remain the popular choice for buyers, while environmental consciousness is driving a sharp rise in EV consideration despite infrastructure gaps.

The ‘Post GST Car Buying Behaviour trends’ study was conducted among more than 5,000 people in October 2025 across Tier I, II and III cities.

“GST cuts have acted as a catalyst, but the larger story is behavioural: buyers are upgrading, not downsizing. Nearly 79% of respondents said they are using GST savings to switch to a higher model, better brand, or premium add-ons, rather than saving the difference,” the study noted.

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Over 60% plan to upgrade to higher variants within the same brand, and 46% have already moved up to a larger vehicle category, from hatchbacks to SUVs, it said.

SUVs dominate new purchase intent, and environmental consciousness is driving a sharp rise in EV consideration, as 67% of respondents said ecological benefits drive EV interest despite battery concerns and high replacement cost.

Financial confidence is clearly rebounding, as more buyers (53%) are ready to make higher down payments or take longer loan tenures, while trust in policy and industry incentives is sustaining optimism, the study noted.

"GST cuts have done more than make cars affordable; they’ve reignited aspiration," said Swagat Sarangi, cofounder, Smytten PulseAI.

"The middle-class buyer is using this moment to stretch upward, from base variants to top trims, from budget brands to feature-rich models."