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Entry-level hatchbacks regain ground after GST cuts, but SUVs continue to dominate

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Entry-level hatchbacks regain ground after GST cuts, but SUVs continue to dominate

Entry-level hatchbacks regain ground after GST cuts, but SUVs continue to dominate

Although affordability has improved, customer aspirations are shifting towards SUVs as first cars.

Sport utility vehicles, meanwhile, continued to rise, securing a 58 per cent share in FY27 so far, up from 56 per cent in the six months before the GST cut.

An unprecedented tax cut on passenger vehicles a year ago may have helped arrest declining entry-level small car sales though doing little to impact sustained strong consumer demand for SUVs. The market share of entry-level hatchbacks rose from 2.3 per cent in the first half of FY26 - the period prior to the cut in goods and services tax (GST) with effect from September 22, 2025 - to 3.3 per cent in the first five months of this fiscal year, showed data from Jato Dynamics. Advt

However, the recovery was limited to only entry-level small cars; the broader hatchback segment stayed stable at around 21 per cent. Sport utility vehicles, meanwhile, continued to rise, securing a 58 per cent share in FY27 so far, up from 56 per cent in the six months before the GST cut. Notably, entry-level hatchbacks had a near 8 per cent share just five years ago, which has since dropped, while the share of SUVs climbed from 40 per cent in FY22. "That is a modest improvement at the entry end within a broader category (hatchbacks) that remains under pressure," said Ravi Bhatia, president, Jato Dynamics.



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