Mumbai, Oct 28 (PTI) 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 1, 2 and 3 cities.

“GST cuts have acted as a catalyst, but the larger story is behavioural: buyers are upgrading, not downsizing. Nearly 79 per cent 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.

Over 60 per cent plan to upgrade to higher variants within the same brand and 46 per cent 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 per cent of respondents said ecological benefits drive EV interest despite battery concerns and high replacement cost.

Financial confidence is clearly rebounding, as more buyers (53 per cent) 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." PTI IAS MR MR

GST reductions spurred buyers to upgrade vehicle models and trims, boosting EV consideration and stronger financing readiness. GST reductions on passenger vehicles operated as a market stimulus prompting buyers to upgrade to higher models, brands, or premium add-ons rather than save the relief. The tax change corresponded with greater willingness to make larger down payments or longer loan tenures and bolstered trust in policy incentives. Environmental considerations increased interest in electric vehicles despite battery concerns, while SUVs dominated purchase intent.