With the implementation of GST 2.0 on September 22, 2025, major auto companies have reduced car prices. Tata, Mahindra, and Maruti vehicles have become cheaper by up to ₹1.2-1.5 lakh. Meanwhile, a new report from Motilal Oswal analyzes the growth outlook for the auto sector after GST 2.0. Let’s examine whether car prices will decrease further or remain at current levels.
Auto Sector’s New Growth Outlook
* In anticipation of rising demand, Motilal Oswal has also increased its volume growth estimates.
* Two-wheeler sales are now expected to grow by 4% in FY26 and 7.5% in FY27, compared to the previous estimates of 1% and 5.7%, respectively.
* Sales of passenger vehicles may increase by 3% in FY26 and 8% in FY27, up from the previous estimates of 2% and 4%.
* Commercial vehicle sales are projected to grow by 5% in FY26 and 7% in FY27.
* Tractor sales are likely to increase by 10% in FY26 and 6% in FY27.
Shift Towards Premium Models
The report indicates that customers are increasingly favoring premium vehicles. This means that people are preferring cars with advanced features and greater comfort over smaller or budget-segment cars. However, demand for smaller cars may also gradually increase, as they are recovering from a low base.
Why Discounts Will Decrease With Rising Demand?
According to the new Motilal Oswal report, there is already an improvement in the demand for cars and two-wheelers. Companies are considering reducing discounts to improve their profits. The report clearly states that as demand increases, discounts will decrease, which will positively affect the margins of automakers.
GST Cut: A Major Game Changer
The real relief for the auto sector comes from the recent decision of the GST Council. The tax on most auto segments has been reduced from 28 percent to 18 percent. The tax on SUVs (longer than 4 meters) has now been set at 40 percent, down from 43.50 percent. This tax cut came into effect on September 22, 2025, and is directly benefiting consumers.
Significant Price Drops
Tata Motors and Mahindra cars are now cheaper by up to ₹1.5 lakh. Moreover, the price of the Toyota Fortuner has decreased by up to ₹3.49 lakh. Maruti vehicles have also become cheaper by up to ₹1.2 lakh.
What Does This Mean for Customers?
It is clear that with vehicle prices already so low, companies will avoid offering additional discounts during the festive season. So, if you are waiting for festive offers, you may not get any special benefits.
