ST Relief Fuels India’s Car Upgrade Wave, EV Optimism, and Middle-Class Confidence: SmyttenPulse AI Study

• 46% have already moved up to a larger vehicle category

• 67% say environmental benefits drive EV interest despite battery concerns and high replacement cost

• 53% can now make higher down payments, signalling stronger consumer confidence

New Delhi, 28 October 2025: While GST reductions on cars have been widely credited for reviving auto sales, a new survey by SmyttenPulse AI reveals a deeper consumer shift: India’s car buyers are not just buying more, they’re buying up.

The “Post GST Car Buying Behaviour trends” study was conducted in October 2025 across Tier 1, 2 and 3 cities. The study reveals that India’s car market is entering 2026 with a renewed sense of aspiration and confidence. GST cuts have acted as a catalyst, but the larger story is behavioural: buyers are upgrading, not downsizing. Consumers are stretching for better models, SUVs dominate new purchase intent, and environmental consciousness is driving a sharp rise in EV consideration despite infrastructure gaps. Financial confidence is clearly rebounding, more buyers are ready to make higher down payments or take longer loan tenures, while trust in policy and industry incentives is sustaining optimism. 

“The GST cuts have been an important tailwind for retail demand, and we’ve seen that reflected in dealer and sales data in recent weeks. Equally critical has been the combination of clear government support for the sector, including EV incentives and charging-infra commitments and proactive industry action: many manufacturers have passed on price benefits and rolled out generous festive discounts and financing schemes. These forces are restoring consumer confidence and helping the market enter 2026 on a firmer footing.” shared Swagat Sarangi, cofounder, Smytten PulseAI. 

The ‘Upgrade Wave’: Tax relief sparks aspiration, not just affordability

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.
Over 60% plan to upgrade to higher variants within the same brand (Chart 1) and 46% have already moved up to a larger vehicle category, from hatchbacks to SUVs (Chart 2).

“GST cuts have done more than make cars affordable, they’ve reignited aspiration,” added Sarangi. “The middle-class buyer is using this moment to stretch upward, from base variants to top trims, from budget brands to feature-rich models.” 

Chart 1: How consumers are using savings from GST reductions

Chart 2: Impact of Post-GST initiatives on car buying preferences

 

SUVs and compact SUVs remain the preferred and most in-demand car categories among consumers, followed by Sedans and lastly, hatchbacks. 
 

Chart 3: Car category preference post GST reduction

EV optimism surges

Post-GST, 46% are somewhat likely and 29% quite likely to consider an electric vehicle.

Chart 4: Consumer purchase preferences for electric vehicles

The top motivators are:

• Environmental benefit (68%)
• Government incentives (66%)
• Reasonable pricing (55%)
   

However, battery life and replacement cost (75%) and charging infrastructure (55%) remain primary concerns and hindrances to adoption. Other challenges are – High upfront cost (43%), low resale value (52%), limited service centers (48%), and driving range on one charge (26%). 

Financial confidence rebounds

More than 58% of respondents prefer to finance their car through loans or EMIs, and 53% can now make higher down payments compared to last year.
Nearly 30% plan to take longer tenures, suggesting that Indians are stretching comfortably and not cautiously.

 

Chart 5: Car financing plan change post GST reductions

Trust in governance underpins buyer optimism

A majority, 55%, feel ‘somewhat to very positive’ about GST changes, and 52% trust that the revisions were ‘designed to benefit consumers’. This reinforces that trust in policy is proving as a positive consumer driver, rather than uncertainty.

The research analysed awareness, perceptions, and behavioural changes following GST rate revisions, with a focus on purchase intent, financing behaviour, and EV adoption.

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